Reinsurers predict rising vehicle insurance premiums due to continued inflation

Reinsurers predict rising vehicle insurance premiums due to continued inflation

According to a report by www.tagesschau.de According to reinsurers, car owners in Germany will have to expect significantly rising insurance premiums for years to come. This is mainly due to the continued high inflation, which is leading to significantly above-average increases in spare parts and repair costs as well as increased claims frequencies.

According to the CEO of the Hannover Re Germany subsidiary E+S Rück, Michael Pickel, the massive losses suffered by motor insurers continue to weigh heavily on profitability. A gradual adjustment of insurance premiums is therefore necessary in order to make the business profitable again in the long term. The upcoming negotiations on new contract conditions between insurers and reinsurers indicate premium increases from January 2024.

The increasing damage caused by inflation means that motor vehicle insurers are expected to spend 2.9 billion euros more on claims, administration and sales than they collect in premiums. Despite premium increases, the loss is only likely to fall slightly, as competition in the industry prevents greater price adjustments. Primary insurers will therefore naturally strive to pass on the higher costs to customers.

Other insurance is also likely to become more expensive as rising claims payments and natural disasters drive up reinsurance prices. Insurance portals are already reporting premium increases of up to 16 percent. This not only affects vehicle insurance for new customers, but also existing customers. The increasing losses from weather-related events and political unrest are leading to a clear trend towards higher losses and thus higher costs for insurers.

Given these developments, it is likely that car insurance premiums will continue to rise and impact other areas of insurance. Consumers must therefore prepare for rising insurance costs while companies try to pass on rising costs to customers.