Profile of a chief executive:

Rolf-Peter Hoenen (HUK-Coburg, Germany)

This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2008

The small town of Coburg in northern Bavaria has plenty of history to celebrate. Visitors to the town, about a hundred kilometres north of Nürnberg, tend to make for the old Fortress, now a museum and art gallery, but once the power base of the Duchy of Saxe-Coburg. Saxe-Coburg's ruling family achieved influence well beyond its borders, not least by marrying into the royal families of Belgium, Bulgaria, Portugal and Britain.

As a location for a major German financial institution, however, Coburg is perhaps not the most obvious place you'd think of choosing. Rolf-Peter Hoenen, chief executive of HUK-Coburg, is more than happy, though, that his company is based here. “We feel comfortable in Coburg,” he says. “We have highly motivated staff, most of whom we train ourselves and who stay in our company longer than average. Sometimes staff members who come from out of town are somewhat sceptical at first, but usually they settle in quickly.”

Hoenen himself made the journey south to Coburg in the late 1980s, moving from Göttingen where he had previously worked for another insurer, Gothaer. He comes originally from the Rhineland region, having been brought up in Aachen on the German border with both Belgium and the Netherlands and later spending his student days at the university in nearby Bonn. After a year continuing his studies in the United States, he developed what was turn into a prestigious career in insurance, working for the German federal insurance regulator and the Ministry of Finance before taking on senior management responsibility at Gothaer in the early 1980s. He has been at helm at HUK since 1991, presiding over an enviable period of growth for the mutual.

Not surprisingly, HUK is an important part of life in its home town, not least as the major employer there. Staff numbers have grown in line with the business growth: the company now employs about 4,800 people in Coburg itself, compared with less than three thousand fifteen years ago. A further four thousand or so staff are located across the country, in HUK's thirty-eight regional offices and at the emergency contact centre in Frankfurt.

HUK was founded in 1933 by a small group of teachers and clergymen who wanted affordable motor insurance, and car insurance remains at the core of the company's business success. Almost exactly half of HUK's premium income (which totalled EUR 4.7 billion in 2006) comes from motor insurance policies, and HUK rides high in the motor insurance league table for Germany with about 11% of market share, second only behind the giant Allianz. In fact, as Rolf-Peter Hoenen points out, if you rearrange the league table to look at the percentage of households who arrange their motor insurance with particular companies, HUK ends up right at the top of the list: close to one in five German families come to HUK for their motor insurance needs.

It's a great situation for any company to be in, though it brings with it the challenge of maintaining market share. The German car insurance business has been extremely competitive in recent years, with some insurers trying to woo customers with cut-price offers of various kinds. “Yes, the non-life market in Germany is rather saturated and has been showing only very little growth. Competition especially in motor is very intense,” Rolf-Peter Hoenen agrees. But he feels HUK has the strategy in place to respond. “We feel more than well-prepared to face these challenges,” he says.

In motor, HUK has recently launched a new comprehensive motor policy, which offers a 20% discount to motorists if they are happy to have repairs to their cars undertaken by one of the 1,200 garages with whom HUK has an agreement. So far about one in two motorists has chosen to opt for this deal.

HUK has diversified in recent decades away from a reliance just on motor insurance. The company is second in the market in both contents insurance and in personal liability insurance, and is also strong in legal insurance cover. A subsidiary offering health insurance was established in 1990 and has grown since then very significantly, so that health insurance now contributes about EUR 950 million in total premium income, or about 20% of the total. HUK's life subsidiary is also important, bringing in a further EUR 800 million in premium income each year.

More recently, the take-over in 2004 of three specialist insurers focusing on providing insurance for churches and clergy has given HUK a particularly strong presence in this niche market. So is the take-over route likely to be followed again by HUK in the years ahead? “There are no current plans, but on no account do we want to exclude the idea,” Rolf-Peter Hoenen says. “Especially if there was an opportunity to strengthen our position further in the life insurance market we would be interested.”

He identifies pensions as well as life insurance as areas of business with potential for growth, pointing out that private pension schemes are becoming increasingly important. “A similar situation applies to the health insurance business,” he adds.

Ask him whether HUK's status as a mutual is a help or a hindrance to the business growth and Hoenen replies without hesitation. “We strongly believe in the principles of mutuality, and consider them to be one of the fundamental factors of our success,” he says. “As a result, the corporate policy is especially focused on the needs of our four million members of our parent company.” He adds that he is convinced that HUK's mutuality will help it successfully meet the challenges yet to come.

Under HUK's mutual structure, membership is restricted to civil servants and other public sector workers, HUK's traditional constituency. It is these members who between them own the HUK-Coburg holding company, which in turn owns the various subsidiary companies under the HUK umbrella. As far back as 1977, however, HUK decided to move beyond its core membership base when it took the decision to offer insurance products to the whole population.

HUK has also proved nimble on its feet in terms of developing online selling of its products over the internet, starting its specialist online-only insurer HUK24 in 2000. “Yes, we decided at an early stage to use the potential of selling insurance through the internet. This has given us a competitive edge and has brought us the leading position in this distribution channel. However, online distribution is particularly suited for standardised non-life products only. Personalised advice will continue to play a prominent role in life and health insurance,” Rolf-Peter Hoenen explains. HUK is continuing, therefore, with a multi-channel approach to selling its products, which includes a network of 38 branch offices where claims are handled, and 400 customer service offices. HUK also has about four thousand agents (so-called ‘trusted advisers').

As Rolf-Peter Hoenen said, one advantage of being in Coburg is that HUK staff are loyal. Unkind voices might say that this is because there are few other employers locally to attract them, but HUK can point to the emphasis it gives to ensuring that its employees can enjoy good working conditions. In 2005 it received an award from an independent German foundation for its family-friendly staff policies, and HUK's good practice in relation to employing staff with disabilities was also highlighted last year in the citation which Rolf-Peter Hoenen received when he was given his country's prestigious Federal Cross of Merit.

Rolf-Peter Hoenen's influence extends beyond HUK itself. He is a member of ICMIF's governing Board, and is also a very senior member of the German insurance industry association Gesamtverband der Deutschen Versicherungswirtschaft (GDV). But there is time for life outside insurance. Upper Franconia, the area of Bavaria around Coburg , is famous not only for its landscapes but also for its beer, with over two hundred independent breweries contributing to the local quality of life. (Spoilt for choice, locals can also drink the wine from the nearby Franconia vineyards). Rolf-Peter Hoenen's particular passion, however, is for the piano, an instrument which he has played for many years and which he plays to a very high standard. Planning HUK's strategy for the years ahead clearly keeps him busy – but a little time is also found for the piano, too.

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