Inflation and insurance: Bafin threatens price increases and interventions

Inflation and insurance: Bafin threatens price increases and interventions

According to a report by www.sueddeutsche.de, claims inflation in motor vehicle insurance continues to be a topic that is of great concern to the financial regulator Bafin. The authority warns that insurers should set aside enough money to cover the increasing losses and increase prices to avoid losses. But companies are hesitant because they fear losing market share in the face of tough competition.

According to reinsurer Hannover Re, a technical loss of 2.7 billion euros is expected in car insurance next year, which is due to rising repair costs and damage. For every euro in premiums, insurers have to spend around 1.10 euros on damages and costs, which leads to further financial challenges. Bafin warns that companies must adequately take inflation and uncertainty into future claims expenses into account in order to avoid existential problems in the future.

The agency is concerned that technical reserves have shrunk even as inflation has risen. Many insurers have made overly optimistic assumptions about the development of inflation, which leads to insufficient reserves. This could have a significant impact on the market, consumers and the industry as a whole.

Bafin will analyze insurers very closely and intervene if necessary to ensure that appropriate steps are taken to counteract claims inflation. It remains to be seen how companies will respond to the authorities' requests and whether the situation on the insurance market will change in the near future.