The Low-Interest Environment

The purpose of this work is to analyse the impacts of the low-interest environment on the German life insurance industry and present different approaches by which life insurance providers may more effectively overcome this crisis. Over the past few decades we have witnessed numerous financial crises that have impacted interest rates which have resulted in an unprecedented drop to 0%. German life insurances are highly bound to these interest rates due to their business model and regulatory laws. Accordingly, many companies in the industry are witnessing considerable losses which are causing mediumterm solvability issues. The current economic- and demographic challenges that Germany is facing affect both the industry and the well-being of Germany¿s future pensioners. Thus, life insurances are obligated to face the current challenges and find way to adapt their business models to the low-interest environment in order to overcome this crisis.