New policy helps protect living space
Homelessness is a pressing social issue in Germany that affects many people. Dr. Jens Rannenberg, a member of the board of the Dachstiftung Diakonie and chairman of the board of the Evangelischer Bundesfachverband Existenzsicherung und Teilhabe e. V. (EBET), has been working intensively for the interests of homeless people for years. In cooperation with the Ecclesia Group, he is looking for answers to the pressing question: How can unused private living space be insured in such a way that owners are even willing to rent it to homeless people without a positive credit check? The innovative insurance solution “Extended Rent Protection” is the result of an intensive process. This product offers economic security for landlords and tenants, and also stands for social responsibility.
In an interview, Dr. Jens Rannenberg and Ansgar Kentrup, member of the management board of Ecclesia Versicherungsdienst, talk about how the insurance solution came about, the challenges that were overcome and the advantages it offers for all parties involved.
Dr. Rannenberg, you are committed to creating living space especially for people with low incomes and/or people in difficult life situations. Why is this topic particularly close to your heart?
Dr. Jens Rannenberg: Homelessness is a major issue in Germany. I have been dealing with the issue of homelessness since I joined the Diakonie in 2006. The Diakonie is one of the largest and oldest providers of services for the homeless. EBET is also particularly committed to helping people without homes and is active throughout Germany as an emergency housing and criminal justice aid. According to a projection as of June 30, 2023, 447,000 people were homeless, according to the Federal Working Group on Homeless Assistance (BAG W). The Federal Statistical Office, in turn, counted 372,000 homeless people in accommodation as of January 31, 2024. This results in a difference of 75,000 homeless people. This is because the BAG W correctly includes in its extrapolation those who are temporarily staying with friends and relatives or living on the streets without accommodation at all.
In addition, many people from the Arab world, as well as Syria and Ukraine, are currently unable to find housing. Of the homeless, around 30 percent are female. Since many homeless people accept offers from institutions, we know that an increasing number of younger and older people are unable to find housing. The housing market has not provided enough affordable housing that meets demand for a long time. However, there are enough apartments in Germany. We would like to make these available to this group.
What exactly are the problems of the people affected?
Dr. Jens Rannenberg: People who live on the street do not receive adequate medical care. They are exposed to further dangers such as violence and theft. The insecure situation in which they live often causes them to consume alcohol or drugs, suffer from unemployment and have psychological problems. Homelessness can have different causes – it can also affect entire families. In principle, it is important to find these people a place to live as quickly as possible so that they can stabilize again and get a job.
“Such a process takes some time because we have to map an abstract risk in the insurance contracts and this has to be done across all lines of business. In this case, we as insurance brokers are the translators to transfer the risk into an insurance solution.”
How can the potential of private living space be increased?
Dr. Jens Rannenberg: There is sufficient living space in Germany. However, it needs to be increased. Two-thirds of the apartments belong to owners who do not have more than five apartments in their portfolio. These owners in particular need to be addressed.
The so-called Karlsruhe model is a prime example of this. The city of Karlsruhe has been using this successfully for many years. In order to use private living space, the city first concludes a contract with the owners. If necessary, they receive a renovation subsidy and a temporary rent default guarantee. In addition, social workers support the tenants. The model in Karlsruhe works. It gives the owners security. My observations also show that many owners believe that they only have bad experiences with economically disadvantaged people. But this is not true. However, there are always cases in which follow-up costs have to be borne, which can sometimes be between 20,000 and 50,000 euros. And word gets around about these cases, creating uncertainty. We approached Ecclesia to cover these damages.
What happened when you received the request from Dr. Rannenberg, Mr. Kentrup? How did you approach the problem solution?
Ansgar Kentrup: At an appointment in June 2023, Dr. Rannenberg explained the increasing problem: homelessness and housing shortage of disadvantaged people. Currently unused private living space could solve part of the problem and referred to the Karlsruhe model. Afterwards, we philosophized about possible insurance solutions.
Dr. Rannenberg, how could you help solve the problem?
Dr. Jens Rannenberg: I was in close contact with Ansgar Kentrup and Katrin Gutseel from product management and was able to provide some figures from a 2022 study by EBET and the Alice Salomon University of Applied Sciences in Berlin, which we compiled at EBET. It was also about what the market looks like and whether there is a need for an insurance product, but also whether scaling is an interesting proposition. The result is a lucrative package. It should help to increase the potential of the housing market and show that tenants who are not financially secure and have problems can also be interesting. We want to create a sustainable solution – an “all-round carefree package for beginners”.
Mr. Kentrup, what happened next?
Ansgar Kentrup: First of all, the problem had to be defined. The question was how to cover the risks of private landlords so that they would be willing to rent to homeless people, who are often considered to be bad tenants. We then outlined what the risk is and what an insurance solution might look like. For a potential insurer, the size of the market is particularly important. If there is likely to be high demand, interest increases. We involved product management to provide further details and initial discussions were held with various insurers. In addition to legal and economic aspects, social responsibility also played a major role for all of our contacts from the outset. Dr. Rannenberg was our sparring partner in the background during these negotiations. We coordinated with him repeatedly to ensure that the insurance solution was a perfect fit.
Dr. Jens Rannenberg: The idea was to create an insurance solution that protects the owners from financial losses. The newly created product offers much more than the Karlsruhe model. For example, the policy can also include a legal protection module if the customer so desires.
Developing a product like this takes time. What challenges did you face?
Ansgar Kentrup: A process like this takes some time because we have to map an abstract risk in the insurance contracts and do so across all lines of business. In this case, we as insurance brokers are the translators who transfer the risk into an insurance solution. The insurer later settles on the basis of the contracts. One problem with the “extended tenant protection” product is the group that is to be insured, for whom the insurers see an increased risk.
How did you convince the insurers?
Ansgar Kentrup: We understood the fundamental problem and created the framework, defined the risks, outlined the insurance solution and highlighted the opportunities for all parties involved. As already mentioned, social responsibility was also a decisive argument.
What exactly is the solution that you can offer?
Ansgar Kentrup: In a nutshell: the insurance solution reduces the risks for private landlords to a minimum, and puts disadvantaged people on a par with highly solvent tenants.
What are the advantages for everyone involved?
Ansgar Kentrup: There are a number of advantages: a socially disadvantaged person without a positive Schufa credit rating gets an apartment and thus takes the first step back to a normal life. Institutions providing assistance to the homeless can carry out their care duties. Private landlords rent out their property with little risk. The insurer takes social responsibility seriously and can, under certain circumstances, achieve economic benefits.
How does their life change when people find a place to live again?
Dr. Jens Rannenberg: Our goal is to get people out of homelessness and provide them with a permanent place to live. The idea is to get them back to work and reintegrate them into society. They also receive support from social workers. They then have the opportunity to take out insurance and sign a lease themselves, thereby becoming independent again.
A personal question: Mr. Kentrup, what does a project like this do to you, especially since you can help people directly with your solution?
Ansgar Kentrup: I am thrilled that we can support people who, for various reasons, have ended up in an unfortunate situation, help them find their way back into life and thus create prospects for the future. In doing so, we are taking on a piece of social responsibility, which is very satisfying.
Together against homelessness
As the Federal Ministry of Housing, Urban Development and Construction reports on its website, the German government is pursuing the goal of eradicating homelessness in the country by 2030. According to the National Action Plan on Homelessness and Homeless Reporting, this can only be achieved if the federal, state and local governments work in partnership with all stakeholders from civil society, business and academia.
According to the definition of the Homelessness Reporting Act (WoBerichtsG), people are homeless if the use of a dwelling by a person or a majority of persons of the same household is not secured by a rental agreement or lease or by any other right, or if a dwelling is not available to a person for any other reason.
“Homelessness can have different causes – and can also affect entire families. In principle, it is important to find a dwelling for these people as quickly as possible.”