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GDV CEO Jörg Asmussen sees his industry on a better path than the economy as a whole. | Photo: www.gdv.de
In the second quarter of 2024, the business climate in the insurance industry improved, according to the “ifo Economic Survey Insurance Industry” continued to improve. “Overall, the sector has become even more optimistic,” says Jörg Asmussen, General Manager of the German Insurance Association (GDV). “This is good news, especially in comparison to the current situation and the mood of the German economy.” The economic survey is a quarterly survey conducted by the IFO Institute for Economic Research on behalf of the GDV among around 150 insurers from various sectors.
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Significantly better business expectations boost the business climate
The business climate rose by 5.4 to 21.2 index points compared to the previous quarter. The value is not a separate question, but is calculated as a geometric mean of the balance of the answers to the business situation and business expectations. A contradictory picture emerged here. While the assessment of the business situation fell slightly to an index value of 4.9 compared to the previous quarter, business expectations rose by 11.7 points and now reach an index value of 38.7. After around 34 percent of companies expected an improvement in the previous quarter,
In the reporting quarter it was already around 43 percent.
Life insurance: Business against regular premiums is assessed positively
The development was mainly driven by life and property and casualty insurance. According to the GDV, wage increases and interest rate cuts in the life insurance sector from April to June provided a tailwind. The business climate index rose by 7.8 to 25.5 index points. In new business with regular premiums, both expectations and, even more so, the assessment of the current situation have improved further.
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In the single-premium business, at least a slow improvement can be observed, even if the premium trend remains negative, according to the GDV. “The increased expectations of interest rate cuts on the markets have recently made the interest on long-term pension products more attractive than on short-term savings products,” says Asmussen.
Inflation-related catch-up effects in property and casualty insurance
According to the association, inflation-related catch-up effects are leading to rising premium income in property and casualty insurance. At the same time, however, significantly higher expenses for claims are to be expected. “The situation is still tense in some insurance sectors – especially in motor vehicle insurance,” says Asmussen.
Rating in private health insurance worsened
The picture has deteriorated significantly in private health insurance. Here, the values for the business situation and business expectations have fallen significantly. As a result, the Ifo business climate index in this sector is now only at 1.0, a decrease of 14.2 points compared to the previous quarter. According to the study, the more pessimistic mood is caused by the worsening assessment of the current situation in terms of performance development.
