The Challenges and Opportunities in the Motor Vehicle Insurance Industry

Motor vehicle insurance has seen better times: inflation and increasing claims payments are causing the industry serious problems. Huk24 board member Uwe Stuhldreier is watching market developments with concern, but he still sees good opportunities for his company in the changeover season.

“Overall, it is a historic situation for car insurance: There is currently no money to be made with car insurance. According to reliable industry estimates, the losses in our industry will amount to around three billion euros this year,” states the insurance manager in an interview with Focus. What is clear is: “We cannot and do not want to draw on our financial reserves in the long term. That’s why the industry – including us – cannot avoid increasing contributions next year.”

Of course, “Huk24 is just as affected by inflation as the classic insurer. Unfortunately, both business models are forced to pass on the cost increases to customers. No market participant can ignore this. In the end, the customer who chooses the direct insurance model always has a price advantage.” Huk24 completely waives agent commissions.

Stuhldreier believes that, given tight household budgets, many customers will switch to cheaper vehicle insurance. As the market leader in the direct motor vehicle insurance market, Huk24 should “benefit above average”. You pay no commissions and have lower costs.

In addition to inflation, damage from natural disasters and increasing severe weather events would also cause problems. “We recently had a storm around Munich and Augsburg. There, hailstones of an unprecedented size not only damaged masses of cars, but also caused numerous total losses. It is completely clear: climate change is leading to greater damage and also driving up insurance costs. Unfortunately, we have to assume that negative weather phenomena will increase in the future,” says Stuhldreier.

However, he is still somewhat optimistic: he assumes that “significantly more drivers will change their vehicle insurance. Because of high inflation, price sensitivity is growing. We are convinced that we will be a beneficiary of this tendency among customers to switch, as we have a better cost structure as a direct insurance company and therefore offer cheaper offers than many competitors.”

Germany’s largest motor vehicle insurer Huk-Coburg had already not presented any good business figures in 2022. Heavy tax burdens, a significantly reduced vehicle market, and simultaneously increased repair costs resulted in a slump in profits for the Swiss franc. The prospects for this year are no better.

“We will see a deep red result,” emphasized Huk boss Klaus-Jürgen Heitmann Handelsblatt with a view to the entire industry. In recent years, car insurers have fought discount battles for customers – with correspondingly low premiums. With the sharp rise in inflation and the higher frequency of claims, many motor vehicle insurers slipped into the red last year.

Author: VW editorial team