Securing the workforce
Price slide for BU insurance: Why it can be risky
March 23, 2026 – 12:45 p.mReading time: 2 minutes
BU insurance is becoming cheaper and more accessible. What sounds like good news could have long-term consequences for insured people.
At first glance it is good news: it is becoming increasingly easier and cheaper for those interested to take out occupational disability insurance (BU). “The price competition in occupational disability insurance (BU) is unbroken – and it is becoming fiercer,” summarizes the Hanover rating house Franke and Bornberg in a current study. In order to compete with other providers, some insurers reduce premiums significantly. In some cases, the average premiums are more than 40 percent lower. At the same time, many insurers have relaxed their risk assessment, for example by shortening the query periods for pre-existing illnesses. This has recently made it easier for people with health restrictions to take out health insurance.
This is of course positive for insured people. But as premiums fall, the risk also increases – for insurers as well as for the insured community. Because the low prices do not always fully reflect the risk for the insurer. If the insurer miscalculates, it can become more expensive for the customer.
In BU insurance, a distinction is made between gross and net premiums. The gross premium is the contractually agreed maximum price: It shows the maximum the insurer is allowed to charge. The net contribution, on the other hand, is the amount that is actually debited from the account. This is why we often talk about the so-called “payment contribution”. It is usually significantly lower because insurers pass on surpluses to their customers. The difference between the two amounts is the so-called gross-net spread. This varies from insurer to insurer.
If the insurer has miscalculated – for example because more customers become unable to work than expected – it can adjust the payment premium. The insurance therefore becomes more expensive for the customer. It is possible to increase the contribution up to the amount of the gross premium, or even beyond that in exceptional cases. The larger the gross-net spread, the higher premium adjustments are possible.
The stricter an insurer is when accepting insurance applications, the safer the insured population is. If, on the other hand, the insurer is particularly risk-averse, this is good news for people with previous illnesses who want to take out BU insurance. However, a loose acceptance policy represents a risk for the insured community and the stability of contributions.
“Anyone who goes too far when calculating premiums buys new business at the expense of stability and the insured pay in the end. Good is more important than cheap – this applies to the BU more than to any other product,” warns Franke and Bornberg managing director Michael Franke.
Even if adjustments to the net premium have been rare in the past, the lowest possible price should not be the decisive criterion when taking out occupational disability insurance – after all, this is not guaranteed. Since BU insurance is taken out for many decades, insured persons should also keep an eye on the insurer’s premium stability. However, the most important point remains the benefits: these must match the needs of the insured person.
