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Posted June 2011

What a freebie. While most companies probably show their appreciation for their employees with an increased salary, a free night out or a generous bonus package, the German insurer Ergo decided a night of sex in Budapest’s Art Nouveau Gellert baths was the best way to keep 100 of its top-performing salesmen motivated. The motto of the grotto event? Coitus ergo sum. Naturally, all this was paid for by Ergo’s insured to the tune of EUR 83,000.

According to media reports, twenty women were hired for the event in 2007 and were required to wear colour-coded wristbands: red for hostesses that were available for flirting but who did not perform sex acts and yellow for women who were available for sex.

This being organised by Germans, the orgy in Gellert’s thermal waters must have given off about as much heat as a pair of very tired old glow worms.

Not only were the prostitutes stamped on the lower arm in order to keep track of how often each woman was frequented – thus preventing the pimps from overcharging Ergo on the bill – there were also women with white wrist bands. They were reserved for executives and the very best sales reps. Just in case things got too steamy, the white ribbons served as a reminder to the navy seals of Germany’s insurance industry where they stand at the feeding trough of life.

Or as George Orwell wrote in Animal Farm (1945): "All animals are equal, but some animals are more equal than others."

The public laughed, the public cried, and Monika Gruber, a satirist, hissed: “How about this incentive? Put all of Ergo’s board members on a party carriage of German Rail, give them yellow wrist bands to wear, bring on an all-female skittles club plus a 100 litre barrel of Riesling bubbly and tell the girls: ‘They are yours!’ If this does not motivate them, they should be sent on a week-long holiday at a pony farm in the German sticks, where they will be fed muesli and get woken up at the crack of worm’s fart to attend a yoga lesson by a raving-loony fat lesbian-feminist.”

The whole sordid affair only came to light in April 2011when a shareholder wanted to know about the company’s “fringe benefits in the pink-red zone” at the General Assembly of Munich Re, Ergo’s parent company and one of the world’s leading reinsurers. Munich Re’s CEO promptly replied that it could not be ruled out that there had been excesses.

Speaking of excesses, it has since transpired that Ergo’s unit Victoria Insurance persuaded thousands of customers to terminate life insurance contracts and reallocate the money in special accident insurance policies. That this was to the financial disadvantage of customers – so what? Insurance salesmen gladly picked up their commission fees.

As if that were not enough, another Ergo subsidiary, Hamburg-Mannheimer also made headlines. In 2005 it had charged 14,000 clients markedly higher administrative fees for state-subsidised pension saving schemes than outlined in the contracts.

Ergo believes that these misdeeds were leaked to the media by greedy former insurance salesmen aggrieved over Ergo’s stubborn refusal to pay them hefty severance payments (rumoured to be EUR 24 million).

Whatever the whistleblowers’ reasons, these incidents raise the question as to how “Ergo-nomic” the whole insurance industry is.

The evidence suggests that insurers have a problem with morals. Right up to the top. Because how can they put such immense pressure on their salesmen to sell their stuff and not be aware that this forces them to dish out false advice to their customers?

The bottom line is: selling insurance is not about taking people’s worry away, but about ambushing the vulnerable and unsuspecting.

That’s the real scandal.

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