Future of motor vehicle insurance: Will the upswing come despite the customs crisis?

Future of motor vehicle insurance: Will the upswing come despite the customs crisis?

German car insurers see themselves in a potentially more profitable situation in 2025 after having to contend with billions in losses in recent years. However, Thomas Diekmann, board member of the VHV, points out that the situation is not entirely positive. The high prices for spare parts in particular, which could rise further due to US import tariffs, represent a serious challenge. Diekmann therefore advocates closer cooperation between the insurance and automotive industries in order to find stronger solutions together. Christof Mascher, Allianz's former IT boss, also calls for intensive data exchange between the two sectors in order to use synergies and better master the challenges. This reports Insurance Monitor.

The ongoing tariff policy of the USA under President Donald Trump has global effects that also affect German insurers and automobile manufacturers. Trump is introducing a ten percent import tariff for all countries, with even stricter rates for certain states. This has already led to negative reactions on world stock markets. Experts warn of significant economic consequences, especially for the European markets. Jörg Asmussen, General Manager of GDV, described the customs policy as a fundamental attack on the world trading system that could potentially have long-lasting negative effects. These measures could raise prices, which is also relevant for consumers in Germany, as German car manufacturers such as Volkswagen, BMW and Mercedes are expected to pass on the tariff costs to customers.

Expected price increases and market falls

The economic consequences of tariff policy are far-reaching. Price increases are expected in the USA, which may result in tighter monetary policy. In Europe, an appreciation of the dollar could affect the pricing of European products, which would further drive inflation. Analysts also see the likelihood of a recession in the US, which could slow economic growth in Europe. Forecasts suggest that growth in life insurance could decline by up to 1.7 percentage points by 2025, while property and casualty insurance – particularly in areas such as transportation and aviation – could decline by up to 1.1 percentage points.

British insurers are also raising concerns about higher costs. Delayed car repairs as a result of new tariffs create additional challenges, while PwC UK points out insurers have not had time to stock car parts, accelerating the impact of tariffs. Tariffs on imported building materials such as steel and wood could also increase the cost of repairing buildings, thereby increasing insurance costs. This dynamic has implications not only for the automotive sector, but also for specialist insurance in the UK that covers complex risks.

Impact on motor vehicle insurers

In the US, a number of insurance sectors will be affected by these developments. Analysts at KBW identify, among other things, personal insurance and commercial motor vehicle property insurance as particularly vulnerable. US insurers are also planning price increases that must be approved by government regulators. Higher claims costs due to tariffs are another expected problem, with American auto insurers facing a 2 to 4 percent increase in costs. This overall picture shows how closely global markets are interconnected and that local developments can have far-reaching consequences. This information comes from Insurance industry today.