Rising costs in the insurance industry: How this affects companies and customers

Rising costs in the insurance industry: How this affects companies and customers

According to a report by T-Online.de, rising costs worldwide will also have an impact on the insurance industry and its customers. Munich Re, the world's largest reinsurer, is planning price increases in the upcoming price negotiations with primary insurers, taking inflation into account as a key factor. Natural disasters are another price driver. According to an estimate by the General Association of the German Insurance Industry, companies' expenses for motor vehicle insurance due to car repairs and other damage are expected to be around 2.5 billion euros higher than their income this year.

The effects of these cost increases are also evident among primary insurers such as Allianz or Generali, who take out insurance in order to be prepared for unexpectedly high losses. These primary insurance policies are taken over by reinsurers such as Munich Re. The price increases in the reinsurance business mean that primary insurers are trying to pass on the higher costs to their customers.

The increasing number and severity of natural disasters, including secondary perils such as thunderstorms, floods and wildfires, are another factor contributing to rising costs in the insurance industry. Political and economic discontent in the form of strikes, riots and unrest can also have costly consequences. These events are increasingly no longer just local, but can affect entire regions.

An example of a cumulative risk, i.e. damage that affects many customers at the same time and can therefore be very expensive, is a major cyber attack that brings companies to a standstill on a large scale. As the number of hacker attacks continues to rise, the cyber insurance business is expected to continue to grow. Munich Re expects a market volume for cyber insurance to be around $8 billion by 2027.

These rising costs and risks in the insurance industry are expected to lead to increases in insurance prices. Customers therefore have to prepare for higher premiums and contributions. It is also possible that certain types of insurance will be deemed unaffordable and insurance companies will no longer cover certain risks. It is therefore advisable to check the insurance conditions and make adjustments if necessary in order to be adequately covered.

Source: According to a report from www.t-online.de

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