The future of insurance: Simple and easy to understand products!

Stefan Knoll is an entrepreneur as he is in the book: clearly focused, self-confident and goal-oriented. He has already created several thousand jobs as a company founder. With the German family insurance based in Frankfurt, he has entered new territory within the insurance industry by setting it up as a digital enterprise: Insurtech.


VWheute: The sale of the life insurance business of a major German insurance company has stirred up a heated debate, but has ultimately been declared legal by the Bafin (Federal Financial Supervisory Authority). Nevertheless, there is a lingering aftertaste causing us to think whether one may proceed the old way trying to save penniless money like an average Joe. What is your stand on this? Is that unethical or just pragmatic? Other insurance companies like the one based in Nuremberg are committed to their life insurance business.

Stefan M. Knoll: I shall only comment on the business practices of my competitors as far as it concerns me or my company. Those life insurance companies that have sold their portfolios to a third party must have had their reasons. However, in reality, the transfer of German life insurance portfolios to third parties does not promote trust in German and European life insurance companies, since these portfolios are vested with a great deal of investor capital, mostly from China. I say this because Deutsche Familienversicherung offers insurance products calculated as per the type of life insurance, and I would prefer not to be asked whether we intend to sell the long-term care insurance portfolios if the number of cases with entitlement to benefit increases. Of course, as a German company, we will not do that. But being credible only means something, if people actually believe in you. And that only takes effect, if you are involved in an industry that runs on credibility. Against this backdrop, I find it unfortunate that investors from China are entrusted with parts of the German pension scheme.


VWheute: They have no pension provision and products to offer in the event of the death of the main breadwinner (life risk), although this is of course important for families in the broadest sense. How is that? Don’t you find the title - Deutsche Familienversicherung a little deceptive? Or let me put it this way: How did your product selection come about?

Stefan M. Knoll: Let me begin with a very formal answer. Deutsche Familienversicherung is the outcome of a private initiative of two entrepreneurs, who have invested their previously earned money in a newly founded insurance company. Albeit setting up an insurance company requires a lot of money, we had very limited financial resources. We therefore had to focus on the founding property insurance. Only one property insurer is allowed to offer supplementary health insurance, including those calculated according to the type of life insurance. We have reached the optimum with the foundation of an all-embracing insurance company for the possibilities associated with our financial resources.


VWheute: You have the legal status of an AG (public limited company). In fact, mutual and cooperative insurance companies are the "better" providers from the client's point of view, since they are not aiming at maximising profits. As an insurer for families, that would have been the ideal way. How do you feel about that?

Stefan M. Knoll: That is no trouble to answer - You need 7 people in order to found an association, but it was only me and my deceased partner, who had the idea to found the Deutsche Familienversicherung. Apart from this, mutual companies also need a capital foundation and thereby their own funds in order to launch their insurance business. Since Deutsche Familienversicherung's own funds came exclusively from us, as private investors, we never considered setting up a mutual insurance company.


VWheute: You are one of the first and almost the only Insurtech that actually works. Why did you choose to walk this path? Don't you think this simply leaves customers in the dust, who don't want to take after digital path? Do customers or interested parties not express the fear of losing their sovereignty over their data? How important is data protection to you?

Stefan M. Knoll: Insurtech and data protection are not mutually exclusive, rather they are interdependent. An Insurtech without data protection is a worthless and, as a result, illegal company. And data protection in itself does not substantiate entrepreneurial action. We stand unreservedly by data protection as a property right, which has its origin directly in the constitution.


VWheute: The stationary sales force and its lobbyists repeatedly accuse digital providers of not giving their customers sufficient advice and not giving them customised offers. Do you share the same opinion?

Stefan M. Knoll: Such assertions are on the same level as Wilhelminian forecasts. The last German emperor also believed that the automobile could never replace the horse. Brokers and insurance agents are essentially needed because the insurance products offered are so complicated that they are often not understood without explanation and remain un-understood even after an explanation. Therefore, the answer to a qualified direct sale is not engaging less in advice when it comes to constantly complicated products, it is rather about offering simpler insurance products that the customer understands without advice. That is how our supplementary dental insurance provides coverage for every dental service or simply put: Everything is included. There isn’t much left to discuss or advise now, is it?


VWheute: So then you can do without people in sales department. Are you not destroying an entire line of profession - that of an insurance agent?

Stefan M. Knoll: We did not set up the Deutsche Familienversicherung so that we could preserve a line of profession. We just want to offer simpler and more understandable insurance products. Many titles including being the best in Stiftung Warentest only go on to prove us right. We can't help it, if the agents prefer to sell insurance products to their customers that are considered to be typically worse than those we offer. Of course any broker can sell our products that have been rated the best in tests. This increases its credibility and stabilises his/her position in the market.


VWheute: You claim to have understood digitisation and to have developed simple products accordingly. How does this fit in with the fact that increasing number of people have more individual lifestyles, which - one might conclude - also need individual insurance solutions? Aren’t you turning a blind eye to the reality? And why are classic insurers producing products that are increasingly complex to understand?

Stefan M. Knoll: As long as the consistency and number of teeth in all people is as similar as the dental services and as long as the majority of our customers continue live in apartments with a lockable front door and every second woman needs to be tended to, the talk about an customised insurance cover is exaggerated to say the least, although it is frequently deceptive. The services in each of our product families are basically the same. We only differentiate according to the level of insurance cover required. This form of customisation can be expected from the customer since he is aware of his financial resources.


VWheute: If one buys a pension insurance, would it be a BU (occupational disability insurance) or a BAV (company pension scheme) (Is this planned?): How would you sell them digitally? Or is that not possible? What do you think of Artificial Intelligence in sales? Isn't that a mockery of human intelligence?

Stefan M. Knoll: I do not believe in the occupational disability insurance schemes in the market today, because it nothing more than an accumulation of indefinite legal terms on the basis of which the customer bears the litigation risk in the event of a claim. In addition, this type of insurance is very expensive and the probability of loss occurrence is low. If we decide to offer similar protection, we will replace the indefinite legal terms with ICD codes (International Classification of Diseases) or the determination of the MDK (Medical Service of the Health Funds). This makes the legal scenario clear and the insurance product affordable, especially for young people. And if the insurance product is as comprehensible as our products, it can also be sold digitally.


VWheute: Some initial moves have already been made for sustainable insurance products that only invest in companies and countries that meet certain ethical and ecological conditions. What do you think about that? Will you be following suit?

Stefan M. Knoll: I don't believe in it, it's just another brainchild of regulatory maniacs. Where do you want to invest sustainably when new moral snipers set new targets every day? Do you want to invest in the German automotive industry, which drags itself from one fraud scandal to the next? Or in wind power and thus promote the death of red kite? Or perhaps in suppliers of mineral water that use plastic bottles? Or one of the large digital companies that is destroying sectors of the economy in full? And what about electro-mobility, which will present an almost horrific eco-balance if the question of disposal of batteries comes forward in addition to the question of where the electricity comes from, for instance? What do you propose to anchor sustainability in? I do believe that it should be about morality and that means that we need to think about how we are changing our way of life. However, this is not an issue that affects the insurance industry alone. Despite this, or perhaps just because of this, it is right for Allianz to withdraw from investments in coal energy. This should now be followed by a debate on industrial livestock farming or industrial agriculture along with supermarkets. Although the plastic bags at the checkout have disappeared, each individual fruit is still packed in individual plastic bags.


VWheute: Aren't you sometimes afraid that the digital way might not be the right way? What makes you so sure that your path is right, even for the benefit of your customers?

Stefan M. Knoll: I'm sure at the moment. But the days when you could plan for years are over. Italy is an important country for the EU and has a new government on average every year. Trump cancels agreements via Twitter and we say goodbye to any future viability of our own country. It is hence an enormous problem, if most parts of policies still believe that digitisation is primarily a broadband supply issue, whereby policies also cannot manage this. Nevertheless, I am convinced that we are in the midst of the greatest upheaval of humanity and this is promoting digitisation with almost frightening consequences.


VWheute: What would you say is your personal moral responsibility as head of the DFV? You are responsible for (how much?) employees, for your customers and for investors? Isn't that squaring the circle? Do you sleep well at night?

Stefan M. Knoll: I have three responsibilities that I juggle quite well. I only offer reasonable insurance products. This ensures the steady growth of the company, which contributes to the stability and security of jobs. The growth of the company determines the value of the company, which makes investors happy.


VWheute: Morality is all very well. But the balance sheet comes first. According to Brecht: First comes food and then comes morality. Will morality be sacrificed, if and when it has to be?

Stefan M. Knoll: No, but we can't die of beauty either. And your morality need not be mine and your morality need not be better or more sustainable than mine. I try to work and act doubly worthwhile according to the principles of Immanuel Kant. On the one hand "Have the courage to use your own mind" and on the other hand, that I only act according to maxims that I would like to become a general law.

Vorstand Dr. Stefan M. Knoll
Dr. Stefan M. Knoll