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Why insurers are now cancelling residential building policies through brokers
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Demolition work on a terraced house: In addition to Axa, Alte Leipziger has also begun to restructure its portfolio of insurance policies for property managers and to terminate contracts with brokers. | Photo: Jan-Mallander / Pixabay
Alte Leipziger has ongoing contracts for Homeowners insurance for property managers with individual insurance brokers. A corresponding Insurance Journal Report The company from the Stuttgart ALH Group confirmed this when asked by DAS INVESTMENT: “As a private insurance company, we have to put profitability at the centre of our actions, which is why we are continuing to keep an eye on developments,” explains Kai Waldmann. On the board of Alte Leipziger Versicherung, he is responsible for, among other things, Business with private customers in the composite sector.
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ALH: “Business four-fifths profitable”
Kai Waldmann © Old Leipzig Insurance
Because: “The challenges in property insurance have increased across the industry – including ours, of course. In the segment of combined residential building insurance for property management companies, four-fifths of the business is structurally profitable. However, in individual cases we are seeing a sharp increase in the frequency and amount of claims and as a result we have separated from around 30 broker portfolios,” he explains.
And further: “The cost ratio in this sector has hardly changed in recent years. The development of claims is linked to the changed market conditions of the last two years: higher claims costs due to inflation, a general shortage of staff and tradesmen, numerous heavy rain events and floods, and rising reinsurance costs.”
Homeowners insurance is becoming more expensive
“Hardening of the reinsurance market is exacerbating the situation for primary insurers, which is making reinsurance more expensive,” reports ALH board member Waldmann. The German Insurance Association (GDV) is therefore already warning that customers in some parts of Germany will soon no longer be able to afford insurance for their own homes. According to the industry association’s estimates, premiums for residential building insurance are likely to double within the next ten years as a result of climate damage alone.
The financial situation is similarly precarious at Axa: “Overall, in addition to ongoing inflation and an increasing number of natural disasters, we are observing a rising trend in major losses in the residential property business and are also faced with worsening reinsurance conditions,” a company spokesperson reported in response to a request from DAS INVESTMENT. “Our homeowner and property manager concept is also affected by this,” he confirmed. relevant media reports about terminations of heavily loss-making contracts.
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Axa: “Most of the portfolio is doing well”
But the decisive factor is: “A large part of our Homeowner and property manager portfolio “It’s going well,” said the Axa spokesman, referring to the policy, for which several tariff modules can be individually selected. “We always manage our portfolio professionally and with the best of conscience in order to live up to our responsibility for the entire collective. This includes insuring new customers at premiums that meet their needs, but unfortunately also remediating existing risks in the long term. In order to position ourselves for the future, we have to terminate contracts in a few exceptional cases.”
In view of the now imminent switch to another insurer, Axa allows its sales partners to terminate the contracts themselves. This is stated in a letter to insurance brokers that the editorial team of DAS INVESTMENT has received. According to this, the contracts can also be “cancelled by mutual agreement”. Otherwise, the contracts would be automatically terminated by the insurer. This should happen at the next main maturity date of the policy. For property insurance, it has become common practice in this country to set this deadline as January 1st from the second insurance year onwards.
HDI stops sales via broker pools
As reported last week, insurance brokers can no longer submit HDI’s private composite insurance policies via their broker pool. This is stated in an official letter from the subsidiary of the Hanover-based industry giant Talanx, which was made available to the editors of DAS INVESTMENT. “The situation on the insurance market for private customers is currently difficult, particularly due to the losses in motor insurance, but also in the private property insurance business,” it says in justification.
Many comments in Facebook groups
In the two largest Facebook groups “Insurance broker Germany” and “Insurance Broker Forum Germany“ by operator Andreas Lohrenz The majority of members reacted calmly and showed some understanding for HDI’s measures. However, some complained about the high additional costs without corresponding returns, which are imminent. Customers unsettled by HDI’s letters are likely to ask for clarification talks. Their contracts may then have to be re-insured.
