The insurers cited the strong claims inflation in the first half of the year as the reason. Berenberg analyst Thomas Bateman is convinced: “The only way out for car insurers is to react with significant price increases.”
In Germany, too, higher damage costs and possible premium adjustments in car insurance have been discussed for some time. However, the providers are still keeping a low profile as to what customers could expect in the next changeover season. Huk-Coburg emphasizes that as the market leader in motor vehicle insurance, it is also not allowed to comment for antitrust reasons.
Frank Sommerfeld, who is responsible for Allianz’s German property insurance business, said in May that he was seeing “increasingly cautious discounts”. For the same reasons as Huk-Coburg, the number two in the German motor vehicle insurance market does not want to comment on current changes in contributions and increases in premiums in the coming changeover season.
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The VHV Group, which is also strong in motor vehicle insurance, is said to be analyzing developments over the course of the year. It is not possible at this point in time to say whether there will be an increase in premiums.
Damage is increasing again after two corona years
However, industry experts believe that premium increases are likely. In principle, there is a need for action by primary insurers to increase premiums, emphasizes a spokesman for Hannover Re. As one of the largest motor vehicle reinsurers in Germany, its subsidiary E+S Rück has a good insight into the business.
There are several reasons for this: Claims costs have risen sharply due to high inflation. In addition, it is also noticeable that after two years with relatively strict corona measures, people are reporting more car driving and more damage. Ultimately, however, it will depend heavily on the respective pricing policy as to whether the providers will increase their prices.
An increase in insurance premiums in new business can already be seen at Check24, says Michael Roloff, Managing Director of car insurance at the comparison portal Check24. That’s not dramatic yet: the prices are currently even below those of the same month last year. “With regard to the year-end business, however, we are assuming significantly higher prices,” emphasizes Roloff.
With gross premiums written of 29 billion euros per year, motor vehicle insurance is the most important segment in property and casualty insurance. In motor liability, insurers benefited in 2020 and 2021 from the fact that fewer people were on the roads. This positive effect on damage is now over.
Storms led to many hull damage in 2021
In comprehensive insurance, however, the providers had to accept burdens as early as 2021. According to the GDV industry association, the storms and flooding that followed storm “Bernd” in Germany last year caused almost twice as much damage as the average. The damage-cost ratio was therefore over 100 percent in comprehensive insurance.
Repairs are currently not only becoming significantly more expensive due to the rising prices for spare parts – they also take longer. This is due to disrupted supply chains, exacerbated by the war in Ukraine. Roloff from Check24 therefore also observes “increasing costs for the provision of rental cars, since the time that the damaged vehicles stay in the workshops has increased significantly due to a lack of spare parts”.
>> Read here: Extreme weather is so expensive for Germany
In its forecast for the year for property-casualty insurers, the rating agency Assekurata also expected premium increases in motor vehicle insurance to be necessary at the end of the year due to the rising claims burden.
Fewer vehicles will be allowed
Assekurata expert Dennis Wittkamp identifies another challenge for the industry – namely a weakening growth dynamic: “In the first quarter of 2022, new registrations and transfers of ownership fell noticeably, so motor vehicle insurers are dealing with a shrinking market for the first time in a long time do.” One of the reasons for this is that fewer new cars are being produced due to the lack of chips and parts.
This trend continued in the second quarter. According to the Federal Motor Transport Authority, eleven percent fewer new cars were registered in the passenger car segment in the first half of 2022 than in the same period last year. The number of transfers of ownership of motor vehicles fell by around 14 percent.
Motor vehicle insurers want to defy the price pressure above all with partnerships. Huk-Coburg relies on service for everything to do with mobility. The insurer recently announced that it intends to take a 25.1 percent stake in the Pitstop workshop chain.
Allianz works with Ford, for example. Together, the companies recently brought a new tariff onto the market in which insured persons only pay the premium for the kilometers actually driven.
More: High inflation is becoming a problem for property-casualty insurers and their customers