Expert warns: Car owners in Germany must expect rising insurance premiums

Expert warns: Car owners in Germany must expect rising insurance premiums

According to Hannover Re, car owners in Germany will have to expect significantly higher insurance premiums for years to come. Above-average increases in spare parts and repair costs led to “massive losses” for motor vehicle insurers, said Hannover Re Germany boss Michael Pickel at the industry meeting on Monday in Baden-Baden. Further price adjustments are “inevitable” in order to bring the business out of the red and make it profitable again in the long term.
Reinsurers such as Hannover Re and Munich Re have been meeting with primary insurers such as Allianz and Axa in Baden-Baden since Sunday to negotiate the conditions for contract renewal on January 1, 2024. After the previous meeting in Monte Carlo in September, the focus in Baden-Baden is particularly on the German market.
This also involves the conditions in motor vehicle insurance – the largest division of the property and casualty business in terms of volume. Hannover Re is number three among global reinsurers and is the largest motor vehicle reinsurer in Germany. This gives her a good insight into the conditions of German primary motor vehicle insurers such as Huk Coburg and Allianz. During the usual switching season in autumn, they compete for new customers with their offers - and are likely to further increase the premiums for their existing customers.
Double-digit premium increases are necessary, writes Hannover Re in its presentation at the meeting in Baden-Baden. The comparison portals Verivox and Check24 have already reported premium increases of up to 16 percent in the past few days - depending on whether it is about motor vehicle liability, partial insurance or fully comprehensive insurance. However, the portals only look at the tariffs for new customers and those switching. Hannover Re also takes into account the tariffs for customers who remain loyal to their insurer.
Many motor vehicle insurers had increased prices, especially for existing customers, and often lured new customers with relatively favorable conditions. Competition in the industry prevented premiums from increasing more overall. Now the industry is in the red. According to Hannover Re's estimates, motor vehicle insurers are likely to spend 2.9 billion euros more on claims, administration and sales this year than they earn in premiums. According to Hannover Re's estimates, average damage is likely to become more expensive in 2024. Therefore, the loss of motor vehicle insurers will only fall to 2.7 billion euros despite premium increases.
Hannover Re also expects prices for reinsurance protection in this country to continue to rise beyond the motor vehicle business. “We have to assume that the long-standing trend towards higher claims payments will continue,” said Germany boss Pickel. The question of how to protect against the consequences of extreme weather such as heavy rain, floods, storms and hail remains highly topical. It affects private households, businesses and industry alike.

Car owners in Germany must expect rising insurance premiums in the next few years. The reason for this is the above-average increase in spare parts and repair costs, which have a severely negative impact on motor vehicle insurers. This was announced by Michael Pickel, Hannover Re's German head, at an industry meeting in Baden-Baden. In order to make the business profitable again, further price adjustments are inevitable.

Reinsurers such as Hannover Re and Munich Re have met with primary insurers such as Allianz and Axa to negotiate the conditions for contract renewal on January 1, 2024. The focus is particularly on the German market, as motor vehicle insurance is the largest division of the property and casualty business. Hannover Re is the third largest reinsurer worldwide, but the largest motor vehicle reinsurer in Germany. This gives the company good insight into the conditions of German primary motor vehicle insurers such as Huk Coburg and Allianz. During the usual switching season in autumn, motor vehicle insurers are vying for new customers with attractive offers and are expected to further increase premiums for their existing customers.

Hannover Re presented at the meeting in Baden-Baden that premium increases in the double-digit percentage range are necessary. Comparison portals such as Verivox and Check24 have already reported premium increases of up to 16 percent, depending on whether it is motor vehicle liability, partial insurance or fully comprehensive insurance. However, these portals only consider the tariffs for new customers and those switching, while Hannover Re also takes into account the tariffs for customers who remain loyal to their insurer.

In the past, many motor vehicle insurers have increased prices, especially for their existing customers, while new customers often received relatively favorable conditions. Competition in the industry has prevented premiums from increasing more overall. Now the industry is in the red. According to Hannover Re, motor vehicle insurers are likely to spend 2.9 billion euros more on claims, administration and sales this year than they earn in premiums. Average damage is expected to continue to rise in 2024. Therefore, the negative result of motor vehicle insurers is only expected to fall to 2.7 billion euros despite premium increases.

Hannover Re also expects rising prices for reinsurance protection in Germany outside of the motor vehicle business. The long-standing trend towards higher claims payments is expected to continue, particularly due to the increasing risks of extreme weather events such as heavy rain, floods, storms and hail. This development affects private households as well as businesses and industry.

Source: www.sat1regional.de