Abstract:

This paper describes, from the German viewpoint, the practical and legal problems of direct selling and the opportunities for its increased use in view of changes in consumer behaviour. The first chapter gives an overview of the current situation with regard to direct selling in Germany and certain other countries in the West and describes current trends. The second chapter considers the difficulties facing the selling of life assurance. Life assurance is an abstract product requiring explanation and over 80% of sales are via brokers. The provisions of the insurance board of control, the ban on granting the individual consumer special advantages and the ban on comparative advertising all considerably narrow the scope for direct selling. The third chapter looks at the consumer's views on direct selling. Considerable inhibition thresholds on the part of the consumer stand in the way of a high potential of customers interested in direct selling (20% of the population), me general disinterest in insurance matters - only 9% of the population takes any mterest - is negatively reinforced by the consumer's fears that direct selling is too complicated. Additionally, the consumer has a rather vague notion about the advantages of direct selling; basically, the majority of consumers does not believe mat those involved in direct selling offer better benefits. The fourth chapter examines the costs of direct selling and explains that direct filing is a more costly sales method if it only serves the acquisition of new customers. The fifth chapter prognosticates that the liberalisation in the European insurance market complicates rather than simplifies the situation for those involved in direct selling.