In Germany, many consumers are paying significantly more than necessary for electricity, gas, insurance, and various contracts. According to Daniel Puschmann, head of Verivox, an average household could easily save over €3,000 annually through consistent comparison shopping and switching providers. Across all categories tracked by the comparison portal, an estimated 70 percent of households pay too much-meaning 70 percent are, in fact, missing out on opportunities to save money.
The areas where comparisons are most worthwhile include car insurance, energy (electricity and gas), and internet or mobile phone contracts. Puschmann pointed out that existing energy customers frequently end up overpaying, while new customers often benefit from considerably cheaper terms. He noted that consumers often allow providers to regularly increase prices, and if they were aware of the situation, they would make a change themselves. Although the German market for electricity and gas is competitive, consumers must be the ones to leverage that competition by making the switch.
Puschmann reassured consumers that the fear of changing providers is baseless. He dismissed the notion that switching would suddenly leave residents without power or gas as a scare story or urban legend. He stated that the market in Germany is well-regulated, and no one would suddenly be without essential services. Furthermore, changing a supplier takes mere minutes. He added that cheap providers are not automatically riskier than expensive suppliers. Many discounters can offer low prices by employing excellent procurement strategies and lean digital processes, and paying more doesn’t automatically guarantee better service.
Following several energy provider bankruptcies in 2022, the legislature introduced additional protective mechanisms. If a supplier intends to cease operations, they must notify the Federal Network Agency at least three months in advance and inform all affected customers. Puschmann also contextualized the previous crisis, noting that the situation was exceptional, given the shock created by Russia’s invasion of Ukraine.
To encourage greater consumer engagement in comparison shopping, more public education is required. The head of Verivox believes there is overall too little knowledge about personal finance in Germany. Many people remain entrenched in contracts that cost them a lot of money due to uncertainty, despite the fact that making changes is quite straightforward. Once a consumer successfully switches their electricity contract and confirms everything is working fine after just a few minutes, the inertia is often broken.
Separately, Verivox has observed a growing caution among banks in the installment credit market. The firm reports that roughly one in four individuals who might have secured a loan three years ago currently cannot under the prevailing conditions.
