Division of departments

This article deals with the segregation of insurance divisions. For the separation of sections in a theater, see multi-section theater .

This article or paragraph presents the situation in Germany . Help us to describe the situation in other countries.

The separation of classes is a principle of the insurance industry. According to Section 8 (4) of the Insurance Supervision Act (VAG), insurance companies that are active in the life or substitutive health insurance business are not allowed to operate any other insurance classes (i.e. no property and casualty insurance business).

Principle of the separation of divisions

Division of departments means that

• Life insurance ,
• Health insurances as well
• Property and casualty insurance

must be operated in independent companies (each as a stock corporation , as a VVaG or as an insurance company under public law ).

Property and accident insurance is also known as composite insurance . The term expresses that these companies are allowed to operate a variety of insurance lines.

In the past, the division of business also applied to legal expenses insurance . This can now be operated in the property / casualty insurance company. However, in order to avoid conflicts of interest, legal protection claims settlement must be outsourced to a legally independent company in accordance with Section 8a VAG (mostly in the legal form of a GmbH ).

Small division of lines

The so-called "small division of lines" means that basically each line of insurance should be self-sustaining in the long term. But this is not a legal obligation. Accordingly, this is often not achieved; For example, almost all insurers have to cross-subsidize the motor business (at least motor vehicle liability) through other branches. However, since this branch is what is known as the “entry-level sector”, this is accepted by the companies.

Division of lines in the insurance group

The separation of branches was and is beneficial for the formation of insurance groups : In practice there are usually legally independent companies operating the business of the respective branch ( "XYZ Versicherung AG" , "XYZ Lebensversicherung AG" , "XYZ Krankenversicherung AG" and " XYZ Rechtsschutz-Schaden-Service GmbH " ). In addition, a finance or management holding company ( “XYZ AG” ) usually acts as the parent company.

Division of branches in Austria

Insurance companies that exercise legal protection insurance alongside other branches of non-life insurance must either perform claims settlement in legal protection insurance

• Organizationally separate from similar activities in other branches of insurance or
• transferred to another, suitable company (Section 12 (1) VAG).

This provision is intended to prevent the simultaneous operation of legal protection insurance and other branches of insurance from resulting in a conflict of interests that endanger the interests of those insured with legal protection.

Cross-financing of the motor vehicle divisions by other divisions is no longer the case in most insurance companies. In property insurance, the proportion of motor vehicle lines in the private customer segment is so high that no insurance company can afford a negative trend.