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 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.
It is also about 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.
Sharply increasing premiums
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.
Protection against extreme weather
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.
