PKV: Impossible escape from rising premiums

There are many factors contributing to inflation in private health insurance. For example, charges for cross-subsidisation for the basic, standard and emergency tariffs. Those who have concluded their private health insurance before 01.01.2009 can also change to the standard tariff – the others only to the basic tariff. The lack of the insurer’s (VR) right of termination in the event of premium arrears also makes private health insurance more expensive. Likewise, fewer and fewer customers are changing their private health insurance or returning to statutory health insurance (SHI) and leaving their ageing reserves behind. Plus the longer life expectancy. Furthermore, the possibility for doctors to propagate more expensive and more treatments, i.e. to control patients.


Rising reserves allow premiums to grow


At least 10% of the private health insurance premium must be deposited with the private health insurance company, similar to a life insurance policy, in order to reduce premiums in old age. Actuarial contributions are increased according to the age reached. So if a tariff is increased by six percent at the age reached, but the insured pays only half of the new premium for his age reached because of his previous insurance period or the ageing provision taken into account in the earlier tariff change, the same absolute increase for him is already around twelve percent.


In this respect, “apparently” high adjustment percentages thus also result from favourable premiums due to high ageing provisions, especially after tariff changes.


Low interest rate hits younger insured persons harder


In the case of older people, however, hardly any interest is accrued on ageing provisions over the remaining term to the end of their lives, so that even a reduced actuarial interest rate does not have a major impact. The effect tends to be strongest in younger years, because then the calculated interest rate is missing for decades via an even further increasing AR, which must be compensated by higher contributions.


The reason for high premium adjustments is, for instance, also due to the need to catch up, if premiums could not be adjusted for more than 5 years and since then the conditions in the tariff have changed considerably, for all calculation bases. Due to § 204 VVG, an insurer unfortunately cannot defend itself against the tendency of sicker changers from higher-value old tariffs. If, as a result of sick people changing jobs, the formerly healthy and thus relatively inexpensive collective bargaining system shifts to a worse state of health, stronger premium adjustments must follow.


VR cannot and must not take such effects into account beforehand. It is precisely these job changers and those with long-term insurance who are then affected by the most significant percentage adjustments. Thousands of Euros for a tariff change broker, had then later recognizably been a bad investment.


So anyone who now has to pay EUR 150 more because of a premium adjustment should be glad that he has got away so cheaply so far, because others are now not being increased so much, but only because they have already paid so much. Privately insured people should set aside some of the money they save by lower interest rates on loans for their investments, or by rent increases from their tenants and profits on the stock market to make more for old age. The higher contributions of the private health insurance are already a part of this, because 50 – 70 year olds can usually already have accumulated between 60 and 100 TEUR AR, and even more in the future.


Those who really can’t pay any more go to the standard tariff with services at the SHI level and pay an average of EUR 160. And then there is also the emergency tariff for only about 100 EUR per month, with which one gets the same service in acute treatment without any excess (SB) even if one does not pay anything at all. Anyone who thinks that the ECB has to get him the money for old-age provision via high interest rates should think about whether he could not try for a change to put some honest work aside for later.


Up to far more than 1,000 € monthly contribution for the private health insurance are not uncommon in old age, if one does not cut back considerably on benefits or if for many years one has saved more old-age provisions in a contribution protection plan for an additional premium reduction in old age.


Nobody is forced to remain in high-quality private health insurance tariffs that are more efficient than those of the statutory health insurance. Some policyholders (UN), for example, are motivated to switch back to the statutory health insurance system by a dispute over private health insurance reimbursement. Alternatively, a private health insurance abroad as well as membership of a health support fund (UK) can be considered. In addition to a UK or statutory health insurance, you can also keep individual tariff modules of your previous private health insurance or take out supplementary insurance. Frequently, the change can relieve the strain on spending – perhaps not in the long term. Some tariff changers notice that after a few years their new PKV tariff has become more expensive than their old tariff.


Benefits from negative interest rates?


An oversupply on the capital markets, i.e. money that is to be invested, pushes interest rates down – right into the negative range. The average “floor” share of product prices is relatively stable – apart from local bubbles – because there has been hardly any increase in demand due to the fact that real wages have been more or less stable for decades.


Credit-financed economic growth failed to materialise in the long term, because the ability of households to service their debts has not increased on average – and companies have more often overcapacities and have become net savers on average thanks to low taxes. The implementation of the Residential Real Estate Credit Directive will dampen the expansion of real estate loans. It would be an ECB legend to believe that more and more investors invest in stocks and then consume the profits. The state is increasingly saving on interest expenditure – no repayment is planned; a potential for tax relief


If the risk-free interest rate on our government bonds is zero, every positive interest rate means a risk for the investor. However, this does not yet mean that it is clear when the real interest rate after taxes will be positive. Because even with 4% interest income, 1% tax and 3% inflation could be deductible.


If inflation, and thus higher interest rates, were desired, the state would have to abandon the monstrance of the self-imposed “black zero” and replace it with fiscal and structural policies. But in this way the interest rate remains permanently low and the old-age provision costs a multiple of the nominal savings, including the expenditure for the ageing provisions in the private health insurance.


In order to build up a pension plan, especially to pay the private health insurance contributions in old age, you do not need interest, but money earned from honest work. If the interest rate is lower, you have to work longer or harder or put aside a larger share for it. Zero is only a number between 10 and minus 10 but not an absolute limit that makes retirement provision impossible. The interest rate is a measure of how the value of money today is estimated to be tomorrow.


The elderly are impoverished because they do not make enough provision, supposedly because it is not worth it, perhaps also because during active periods they think they have nothing left to put back. This is of course not true when you see how they waste their money on non-survival necessities in order to copy the lifestyle of the next richest person. If the poor have to limit their consumption, it is the duty of the rich to fill this gap. The poor producers should be happy if the rich buy their products from them instead of being left sitting on them or having to step in as taxpayers for credits given abroad to buy the goods produced in excess.


Money is for spending, not for accumulating. However, it is not objectionable to put something aside appropriately for old age. Spending for consumption benefits everyone, including the poor and previously unemployed. Accumulating money in order to have more, which one does not need later, is to be discarded. Dr. Abdul Azim Islahi, Professor of Economics at the Islamic Economics Institute at King Abdulaziz University in Jeddah, wrote the following in his doctoral thesis on “Economic Concepts of Ibn Taimiyah” on page 118 (the revised version of the Islamic Foundation in Leicester):


“A man’s obligation to provide for YOU and your dependants requires, among other things, worldly means, which makes their acquisition a (religious) imperative. Ibn Taimiyah supports this view by quoting one of the earliest fiqh scholars, (the Tabi’in) Sa’id bin al-Musayyib, who said that “there is nothing good in a person who detests wealth, when a person is able to serve his Lord, pay his debts, protect himself and remain independent of others.


The thought experiment “Josephspfennig” of the economist Richard Price with exponential money increase by compound interest shows that a positive interest rate is absurd in the long run and the negative interest rate is a reasonable solution. If necessary also the wealth tax or the obligation for Muslims to give 2.5 % per year of larger financial assets to the poor. Occasional wars, earthquakes, even the obligation to head-hunt, can have the effect that a positive interest rate can be maintained. But minus interest makes peace possible The interest rate that has been fixed in the BGB since 1900 was already attempted in 1919 by the economist Gottfried Feder to abolish it as “interest servitude”.


It is foreseeable that the insurers will not even be able to borrow the money against real positive interest rates, but will put it in the safe, so to speak. They have to cash out every year and if they have lost some of the money entrusted to them, or have earned less than the 3% on average in guaranteed interest, they have to replace it with their own capital.


Insurers must check every year whether they do not perhaps owe the customer more than they still have. An equity crisis or a fall in bond prices cannot wait them out beyond the end of the year unless they have enough equity. The legal accounting trick of hiding and sitting out losses generated by hidden charges cannot eliminate this danger.


So insurers are educated to behave like the useless servant with the entrusted talents. Today’s regulations are still up-to-date when it comes to guarantees. To expect only guarantees is not in keeping with the times, if you get the contributions and nothing else back after 30 years of saving. For a long-term business such as the insurance business with a “balance in time” over years, no annual cash fall fits. It’s like telling the servant to take a risk and bring in a tidy profit, but with the prospect of coming by every evening with a saber to see if the money is still there.


For someone who wants return on investment, it is completely absurd to give the money to someone who is supposed to guarantee it. In addition, still constantly, because VN can come to the life insurer monthly to demand the guaranteed surrender value. The situation is different with British insurers, where there is a guarantee to expire in 30 years, but none in between. Legal regulation is thus driving up private health insurance premiums and down life insurance benefits.


Still little demand from insured persons in the standard tariff


Anyone who is 55 years old or already drawing an (EU) pension and earns less than the annual income limit (JAEG, 2016: 56,250 €), or who has reached 65 years of age, could switch to the standard tariff if they had taken out private health insurance until 2008. The associations of statutory health insurance physicians appoint, on request, physicians/CWTs who are willing to treat at the conditions of the standard tariff. These have a statutory guarantee obligation.


In some big cities there is such a doctor with a practice on the fourth floor without a lift, where patients have to wait in the hallway, for example in the broken glass district. But he may only understand Arabic or sign language. You just have to point to where it hurts. Alternative: You wait until Saturdays and then go to the emergency outpatient clinic e.g. to the hospital.


If you go there in the hope that the pain will either subside or you will not die until both of these have not occurred, you will also pass as an emergency in the emergency tariff. If the number of insured persons in the standard tariff increases, there will also be more offers. In the past, motorists also had to get their petrol in half-litre bottles from the pharmacy. But today you rarely find a post in front of the restaurant where you can tie up your horse.



by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of (Published on 09.11.2016)


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and (published in issue 12-2016, page 30 under the heading The impossible escape from rising contributions)




published in “Der Koment, trade journal for showmen and market traders” 20.11.2016 (issue 5553, page 3)

and (published on 17.11.2016)





and (published on 21.11.2016 under the heading The impossible escape from rising contributions in the private health insurance – Part 1)


and (published on 22.11.2016 under the heading The impossible escape from rising contributions in the private health insurance – Part 2)


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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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