Tasmanian police say an offer of indemnity may be possible in the case of missing German backpacker Nancy Grunwaldt.

The 26-year-old tourist was last seen riding her red push bike in Beaumaris on the state's east coast in 1993.

Indemnity can only be offered by the Director of Public Prosecutions.

Detective Inspector Scott Flude says it would depend on the circumstances.

"It's certainly another string in the bow of the investigation we can use," he said.

"We're just not able to offer a blanket indemnity because if Ms Grunwaldt died as a result of a criminal act there's no way we can offer indemnity for that."

Retired detective Bob Coad believes Ms Grunwaldt was accidentally knocked from her bike and killed.

Inspector Flude says the police would work with anyone who came forward with information backing Mr Coad’s theory.

DPP Tim Ellis will not say whether he would charge someone who admits to playing an accidental role in her death.

Ms Grunwaldt's mother Helga and younger sister have flown to Tasmania from Germany to mark the 20th anniversary of her disappearance.

The family has made several trips to the state over the years and have made appeals for help through the media.

They were briefed on the investigation by police in Launceston this morning.

They emerged from the meeting after half an hour but declined to be interviewed or comment on the outcome.