Direct Contracting may offer ACOs a unique opportunity
The Direct Contracting model includes a unique feature allowing accountable care organizations the ability to contract with providers.
Two major factors underpin the attractiveness of the German life insurance market for international investment:
In terms of accessing the market, by essentially creating a common insurance market for EU countries, the 1994 directive offers opportunities for insurers to leverage tax and regulatory advantages across national borders, either by taking advantage of the directive’s "freedom of services" provisions or by establishing branch operations in target countries. Both the freedom of services and branch methods require supervision by the insurance authority of the insurer's home country. Because other countries may enjoy regulatory environments more relaxed than Germany's, there are distinct advantages to writing cross-border business. For example, Ireland, Luxembourg and, to a lesser extent, Liechtenstein2 are now popular locations for establishing insurance subsidiaries for cross-border business—even some German companies use Luxembourg subsidiaries to write policies in Germany3. Taxation is an important attraction; these three countries have the lowest tax rates in the EU. Moreover, companies selling across borders are subject to the consumer protection requirements and policyholder taxation rules of the target country. If companies base their cross-border operations in countries like Ireland, Luxembourg, or Liechtenstein, the authorities usually require that administration be performed in the home country. Some customer servicing and most sales functions are usually based in the local country for obvious linguistic and cultural reasons.
The German life insurance market represents an attractive opportunity for expansion and growth. Demographic changes, high consumer awareness, and tax incentives will continue to drive demand in the private pensions business. High volumes of maturing life insurance and other investment contracts create unique opportunities for reinvestment that will need to be met in the coming years. And more restricted state benefits for the disabled will increase demand for disability and critical illness policies. For American and other non-EU companies seeking to expand their business into Germany, the simplest approach is to establish a subsidiary in any EU country—if they don't have one already—and to sell into the entire EU, including Germany, through the freedom of services provisions of the Third European Union Directive.
1. Source: DIA.
2. Liechtenstein is not part of the EU but part of the EEA (European Economic Area), which allows companies to sell into the EU countries from Liechtenstein as well.
3. i.e. R+V, ERGO group, Talanx group
International investment opportunities: the German life insurance market
$(document).ready( function() $("a#lightbox0").fancybox( 'titleShow' false,'overlayColor' '#000','overlayOpacity' 0.7 ) ) click to enlargeSince enactment of the Third European Union Directive in 1994—which, among other things, allows life insurance providers based in one EU country to sell products and services in any