ROUNDUP: Motor vehicle insurers are raising premiums – but they’re still in the red

BADEN-BADEN (dpa-AFX) – Car owners in Germany must pay for their vehicle insurance, according to Hannover Re DE0008402215 Digging even deeper into your pockets in 2025. Local motor vehicle insurers would have to raise prices significantly again, said the outgoing boss of Germany’s third largest insurer world, Michael Pickel, on Monday at the annual business meeting in Baden-Baden. Nevertheless, German vehicle insurers are facing further losses for years. Spare parts and repairs will also be significantly more expensive.

In the coming year, German car owners will have to pay eight percent more on average for their motor vehicle liability and partial insurance than last time, Pickel estimates. Comprehensive insurance is expected to become more expensive on average by around twelve percent.

The comparison portal Verivox had predicted an even bigger increase in prices for insurance changers at the end of September: offers were 21 percent higher than a year earlier. Hannover Re, on the other hand, is also looking at the conditions for car owners who are still loyal to their insurer. It also includes increased no-claim discounts. As Germany’s largest motor insurer, Hannover Re has a good view of the premiums of leading insurers such as Huk Coburg and Allianz DE0008404005.

Despite the increase in prices, the premium income of the business will again not be enough to cover the costs of applications, administration and sales. Last year, German vehicle insurers had already recorded an underwriting loss of 3.4 billion euros.

According to Hannover Re estimates, this deficit is likely to decrease to around 2.3 billion euros this year. For 2025, the reinsurer expects a loss of 1.6 billion for the industry.

“Major insurers will not be able to avoid further significant increases in motor vehicle insurance premiums in the coming years,” said Pickel. This is the only way they could bring their motor vehicle business out of the loss zone. The German industry association GDV also expects a loss of around two billion euros for 2024.

In Baden-Baden, the world’s largest insurer Munich Re also warned major insurers to demand “adequate” – ie high premiums from their customers. In German motor insurance in particular, a longer development phase is needed before Munich Re can become more involved in this industry, board member Clarisse Kopff explained.

With a view to natural disasters, Munich Re also wanted major insurers to take climate change risks into account when setting their premiums. Recently, insurers have increasingly withdrawn from covering small and moderate natural disaster losses. Events such as floods, forest fires and severe thunderstorms have increased significantly in recent years.

In recent years, insured losses from natural disasters have exceeded 100 billion US dollars (approximately 92 billion euros). According to the calculations of Munich Re, in the first half of 2024 it was already 62 billion dollars. It was only at the beginning of October that Hurricane “Milton” caused damage in the USA that is expected to cost tens of billions.

Munich Re wants to continue offering protection against such severe storms. The group has taken into account these events in their prices, explained Kopff. According to estimates by the risk manager Moody’s RMS, the private insurance industry may have to pay between 22 and 36 billion dollars ​​for the consequences of “Milton”.

At the same time, Munich Re has been more cautious with so-called cyber insurance, which covers damage caused by hacker attacks and computer system failures. Although the group wants to continue to grow with the market in this sector, it has recently reduced its global price level. It excluded the effects of cyber wars with state actors from its contracts.

For 2024, Munich Re expects its core cyber business revenue to drop to $1.8 billion. In 2023 they had already fallen from 2.2 to 2.1 billion dollars. The global cyber insurance market was worth $14.1 billion. At the same time, management predicts strong growth for the European market. Cyber ​​insurance is still not widespread on the continent./stw/ngu/jha/