How German angst created the welfare state | Business| Economy and finance news from a German perspective | DW | 29.03.2019
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How German angst created the welfare state

In Germany, the willingness to pay for peace of mind dates back more than a century. But are today's insurance companies equipped to allay the nation's biggest fears? DW's Kate Ferguson takes a closer look.

For the last quarter of a century, German insurance group R&V has been conducting an annual survey of the country's biggest fears. The results offer a fascinating insight into the national psyche.

For much of the last decade, economic anxieties have prevailed. Unsurprisingly, they were most acute in the years following the financial crash.

 In 2010, Germans were most scared about the prospect of rising prices. Then, every year between 2011 and 2015, what they feared more than anything else was the eurozone debt crisis.

Terrorism took over as the biggest fear in both 2016 and 2017. And last year, none other than US President Donald Trump became the biggest source of German angst.

All of this is of course very interesting to insurance companies, whose businesses are built on and sustained by fear. This applies especially in Germany, which has a long and rich history of paying for peace of mind.

Personal experience

As I quickly discovered after moving here, not having health insurance, for instance, is like leaving your house without your clothes on. Completely unthinkable and actually illegal.

The state sets the tone. Your contributions are deducted automatically from your salary at a rate of 14.6 percent. You and your employer pay half each. Unemployment, pension and long-term care insurance are also taken out of your pay.

A guinea pig

If you have a pet, expect to be judged for not guarding against all eventualities, Kate says

Liability insurance isn't legally required, but people will raise an eyebrow if you don't have any. Additional dental insurance, for procedures not covered by the statutory system, comes widely recommended. And if you have a pet, expect to be judged for not guarding against all eventualities. One company I found promises to reimburse you for the costs of looking after your guinea pig in the case that you're hospitalized. The price of that peace of mind begins at €13.39 ($15.15) a month.

Alleviating angst is a highly lucrative business. In 2017, for which the latest figures are available, German insurance firms took in a total of €198 billion in contributions and provided work for more than half a million people.

All this begs the question: Are Germans an especially fretful people? Do they really lose sleep over their guinea pigs? 

Well, angst is a German word. But more importantly, I feel there is something in the Teutonic character that favors dealing with fears head-on, rather than repressing them and leaving things to fate as other nations tend to do.

Prussian stateman as mastermind 

With this in mind, it makes sense to me that the architect of modern social insurance was none other than Otto von Bismarck. The bushy-mustached 19th century Prussian statesman is best known for his pursuit of German unity. But his creation of the world's first welfare state is an equally remarkable legacy. 

Ironically, it was a fear of socialism that made him do it. Specifically, Bismarck was concerned by the growing might of a workers' movement spearheaded by the Social Democratic Party which he labeled reichsfeinde, or enemies of the empire.

Keen to ensure his own political survival, Bismarck sought to address workers' anxieties directly. In the 1880s, he introduced old-age and accident insurance, as well as socialized health care. Participation was compulsory and both the employer and the worker contributed.

As fate would have it, it wasn't enough to stave off political opposition. Bismarck ended up resigning in somewhat of a huff in 1890. But well over a century later, the proof of the endurance of the system he created is printed on my pay slip.

German angst, like the insurance system designed around it, has developed over time. These days, Germans no longer fear impoverishment and ill health as much as they do geopolitical developments across the Atlantic.

The first firm to offer insurance against the incendiary potential of a US presidential tweet stands to make a killing.

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