HDI Company: Germany's third largest insurance group by premium income
HDI (Haftpflichtverband der Deutschen Industrie Versicherung auf Gegenseitigkeit V.a.G.) is Germany's third largest insurance group by premium income. Headquartered in Hannover, Germany, HDI is present around the world. The company's largest business division is reinsurance arm Hannover Re, one of the world's largest reinsurers. Most other of HDI's insurance operations, including life, accident, property and casualty, and auto insurance for private customers, as well as the management of its financial assets, are organized under the umbrella of Talanx AG. HDI's core business, liability and casualty insurance for corporate clients, is organized as a mutual insurer, a membership association which was founded at the beginning of the 20th century.
In December 1903, a group of German industrial entrepreneurs established a new organization to cover their liability insurance needs. Founded in Frankfurt am Main, Haftpflichtverband der Deutschen Eisen-und Stahlindustrie was not just another insurance company. Under German insurance law, the Haftpflichtverband had the legal form of a nonprofit association, a "Versicherungsverein auf Gegenseitigkeit," in short V.a.G. This meant that its members were the insured as well as the insurers, cooperatively determining their insurance needs and the policies and conditions for their coverage. Such a new entity was unheard of in the world of business liability insurance, which was dominated by private insurance companies. The birth of the Haftpflichtverband, however, did not come out of the blue.
Business insurance cooperatives already existed in Germany around the turn of the 19th century. One of their domains was insuring workers against injury in case of work-related accidents. This was especially necessary in such industries as mining, steel and iron processing, and heavy machine building, which by their nature involved hazardous tasks. In 1900, a new law encouraged the "Berufsgenossenschaften," as those cooperatives were called, to establish their own organizations to offer business liability insurance for their corporate members. Shortly after the initiation of the new law, Hermann Blohm, co-owner of the Hamburg-based shipyard Blohm+Voss and representative of the northwestern chapter of the Berufsgenossenschaft for the iron and steel industry, proposed to undertake a survey among the organization's corporate members regarding to their liability insurance needs. Blohm's proposal was approved and the survey revealed that 237 out of 312 member firms had bought liability coverage from private insurers, leaving one quarter of all members uninsured. In the 68 cases in which firms that held liability policies were reimbursed for damage by their private insurers, the ratio of claims paid out to premiums paid was just 2 percent, hinting at the handsome profits the insurance companies must have made. The survey also showed that many of the participating companies were interested in a more affordable liability coverage that was tailored specifically to the needs of heavy industry.
Within the next two years, a commission consisting of members of the Berufsgenossenschaft in the cities Hannover, Saarbrücken, and Mainz worked out detailed proposals for a new liability insurance entity covering the German iron and steel industry. The commission also negotiated conditions with the German government agency for the insurance industry, the Reichsaufsichtsamt, and solicited letters of intent from its members to join the new organization. Designed to be independent from the Berufsgenossenschaft, the new association benefited from the organizational know-how gathered by its creator. The Haftpflichtverband's founding members especially emphasized being independence from private insurers. However, the Reichsaufsichtsamt requested that the Haftpflichtverband get reinsurance coverage. Since German insurers did not have an interest in backing up a new competitor, the Haftpflichtverband had to look abroad for a reinsurance partner and finally found one in Austrian insurer Erste Österreichische Allgemeine. After the new organization had been formally established at the founding meeting in late 1903, the Haftpflichtverband, consisting of 176 corporate members from six Berufsgenossenschaften of the iron and steel industry, started operations in April 1904. >>>Continue>>>Part 2.
