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Car insurance
Württembergische and Itzehoer also reduce their automotive business
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Tesla cockpit: For drivers in this country, not only are the prices for repairs and spare parts rising, but also the premiums for their car insurance policies. | Photo: Borys Zaitsev / Pexels
ARTICLE CONTENT
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Page 1 − Main reasons for rising contributions
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Page 2 − Insurers have been on a crash course for months
Many car insurance customers must expect premiums to rise significantly in the coming year: “Customers with their own house and car are probably the group of people who can expect the most serious premium increases in the coming year,” Stephan von Heymann according to a current post in the online network LinkedInHe began his career in the insurance industry as a trainee at Ergo in Bremen and worked for several years as a self-employed insurance agent in Leipzig. Ten years ago he moved to Berlin as an employee at a broker pool.
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Main reasons for rising contributions
Stephan von Heymann © Aruna
Those affected are “families with their own homes in rural areas who rely on multiple vehicles in particular,” writes the industry expert for commercial and private composite insurance. “I’m currently expecting increases of around 20 percent plus X for car insurance.” He cites inflation as one of the main reasons for this: “The general rise in prices leads to higher repair costs for vehicles.” Secondly, he cites natural damage, which also leads to more damage to vehicles. As a third and fourth point, he also mentions that delivery difficulties for spare parts and the lack of tradesmen are driving up repair costs.
Insurers are putting the motor vehicle business to the test
“But the enormous challenges in motor insurance are widespread and thus affect almost all renowned motor insurers, as the magazine THE INVESTMENT “I explained this in detail in April,” he continues. “As far as the year-end business is concerned, I can only advise every agent to request the necessary customer data in good time in order to be able to react quickly in the event of a necessary contract change. In my opinion, this applies in particular to car insurance.”
Itzehoer ends special Tesla insurance
Currently, for example, the Itzehoe announced that it is phasing out its special insurance for Tesla vehicles. “As of July 1, we have stopped the new and replacement business via this special concept with the company Emover24,” confirms Frank Thomsen relevant media reports at the request of DAS INVESTMENT. “The existing contracts, the number of which we will not disclose, all have a main maturity date of January 1, 2025. The contracts will remain insured until then within the agreed scope of cover,” said the board member responsible for sales and marketing.
Sales partners were informed early
Frank Thomsen © Itzehoer
“We informed the sales partner early on that we would not be continuing the contracts in this concept in 2025,” Thomsen continues. The contracts will therefore not be terminated by Itzehoer, but will be covered by the insurance broker with another insurer. “One option that is also open to the sales partner is to insure these vehicles with us in the current private customer tariff or – for commercial customers – in our small fleet tariff.” This additional option will be available until the turn of the year.
“Model has not been profitable for some time”
The reason for the current end of the concept is that it is a so-called unit premium model. “The model has not been profitable for a long time,” explains Thomsen. “Due to the very differentiated tariff landscape in the German motor insurance market, the unit premium approach leads to increasing anti-selection, which has a strong impact on the results.” However, nothing will change in the general motor vehicle tariff strategy: “Of course, we will remain a reliable partner for broker pools, associations and all directly connected brokers.”
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Itzehoer continues to insure Teslas
Teslas will continue to be insured – both as Itzehoer and under the Admiraldirekt brand. This subsidiary has been offering affordable insurance with personal service through direct sales for 17 years. “The vehicles can be calculated and taken out as normal using the brands’ tariff lines for private customers and the Itzehoer brand’s small fleet tariff,” explains the sales director. “Here, however, the risk assessment is carried out according to various tariff characteristics such as type class, SF class, mileage, driver group and so on.”
Motor insurance again the strongest driver
Uwe Ludka © Itzehoer
According to the company, motor vehicle insurance was “once again the strongest driver” in the previous financial year: the number of insured vehicles increased by 11.4 percent to almost 1.3 million in 2023. In this sector, premiums also grew – by 12.3 percent to 492.7 million euros. The “downside of the record growth”, however, was a sharp increase in claims expenses. “We were unable to decouple ourselves from the deficit situation in the overall market,” reports Itzehoer CEO Uwe LudkaLast year, the level of motor vehicle premiums was not sufficient across the market, particularly due to inflation. As a result, motor vehicle insurers suffered financial losses across the board.
Rapid growth – higher loss ratio
According to statistics from the General Association of the German Insurance Industry (GDV), providers had to cope with an average loss of 11 percent of the written premium in the motor vehicle business in 2023. “In the case of Itzehoer, experience has shown that rapid growth is often accompanied by a higher loss ratio.” Itzehoer responded to this with initially moderate premium adjustments. “We could afford this because we had previously had an opposite effect in the form of lower claims expenses during the Corona pandemic.” Itzehoer has now reduced equalization provisions that were built up in the balance sheet at the time by withdrawing 43.9 million euros.
12.5 cents loss per euro of contribution
“In this way, we have returned the additional income to our members and customers,” explains Ludka. But the cost-covering level has still not been reached. “A situation like in 2023, in which we lost 12.5 cents per euro of premium in the motor vehicle sector, makes further premium adjustments unavoidable for us in the current year,” he announces. The CEO also fears: “Despite these countermeasures, we will still have to report an underwriting loss in motor vehicle insurance before equalization provisions in 2024.” But Ludka announces that the company will return to profitability as early as next year.
