Germany Opens Life Insurance, Retirement Services for Direct Marketers

NEW YORK — German legislation passed earlier this month encouraging citizens to depend more on privatized life insurance and retirement packages should prove to be a boon for direct marketers, according to Holger Albers, managing director at the DDV, Germany's version of the Direct Marketing Association.

Traditionally, German tax law discouraged citizens from going outside the country's social pension plans, Albers said while attending the DMD Marketing Conference and Exposition. He said the new regulations, which will take effect at the start of 2002, increase the tax deductions for the money Germans put into their private plans.

Albers said this will drive as many as 26 million people off the country's version of the Social Security system, and direct marketers in the insurance industry are preparing to capture this audience.

“This is going to boom,” said Albers, who recently was elected chairman of the Federation of European Direct Marketing. “Very suddenly, there is a new cake on the table, and everyone wants a piece. The knife that will cut the cake, in my opinion, will be direct marketing.”

Germany is dealing with an aging population while its tax base is having trouble supporting government pensions for the 60-and-older group, said Werner Schmidt, press officer for the German Embassy in Washington.

Schmidt said that for each retired citizen, the government currently uses income taxes from two German workers. Without privatizing pensions, he said, the country projects that by the year 2025 taxes paid by one worker would have to support two retired citizens.

“The new legislation is only the beginning,” Schmidt said. “They will have to open up the market even more. What this means is that people who are 50 and older may not be looking for insurance because they have built up their [guaranteed] social pension, but the younger people will be good targets for marketers.”

The DDV estimates that 16 million people will opt for life insurance plans while 10 million will go to investment bankers to secure their retirement income.

Marketers have to apply for certification to target the market. Most firms will not know until this fall whether they have been accepted, although larger firms are clearly counting on the certification.

A handful of large European insurance marketers, such as Allianz and AXA Colonia, began positioning themselves this spring as news indicated the laws were about to pass, Albers said.

Allianz debuted a direct mail campaign featuring its insurance programs the week after the legislation went through and ran television spots in conjunction with the mailing, he said.

Allianz also printed 10 million leaflets that are being distributed throughout German commercial districts, Albers said. Insurance firms such as Allianz are in a natural position to target their car insurance and home insurance customers because they have information about them such as age and income, he said.

Albers said it is too early to estimate the amount of money that will be spent on direct mail campaigns to capture these new sales opportunities. However, he said printers and ad agencies will see a jump in clientele and order sizes in January.

Germany still holds some of the most restrictive regulations for direct marketers of any country in Europe. Direct mail marketers cannot offer side items or sign partners to target cross-sell opportunities.

But Germany recently eased the rules for direct marketers in other ways. Its Discount Law of 1993, which restricted retail discounts to 3 percent for cash purchases, was recently repealed. The government also passed a law that permits e-signatures.

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