Hannover Re: Motor insurer with "massive losses"
According to Hannover Re, car owners in Germany can expect insurance premiums to rise significantly for years to come. Above-average increases in spare parts and repair costs have led to "massive losses" for motor insurers, said Hannover Re's head of Germany Michael Pickel at the industry meeting in Baden-Baden on Monday. Further price adjustments were "unavoidable" in order to bring the business out of the red and make it profitable again in the long term.
Reinsurers such as Hannover Re and Munich Re have been meeting with primary insurers such as Allianz and Axa in Baden-Baden since Sunday to negotiate the conditions for the treaty renewals as of January 1, 2024. Following the previous meeting in Monte Carlo in September, the focus in Baden-Baden is particularly on the German market.
The conditions in motor insurance - the largest segment of the property and casualty business in terms of volume - will also be discussed. Hannover Re is the number three reinsurer worldwide and the largest motor reinsurer in Germany. This gives it a good insight into the conditions offered by German motor primary insurers such as Huk Coburg and Allianz. These companies are vying for new customers with their offers during the usual switching season in the fall - and are likely to further increase premiums for their existing customers.
Sharp rise in premiums
Premium increases in the double-digit percentage range are necessary, writes Hannover Re in its presentation for the meeting in Baden-Baden. The comparison portals Verivox and Check24 have already reported premium increases of up to 16 percent in the past few days - depending on whether it concerns motor third party liability, partially comprehensive or fully comprehensive cover. However, the portals only look at the rates for new customers and those switching insurers. Hannover Re also considers the rates for customers who remain loyal to their insurer.
Many motor insurers had increased prices, especially for existing customers, and often lured new customers with relatively favorable conditions. Competition in the industry prevented premiums from rising more sharply overall. The industry is now in the red. According to estimates by Hannover Re, motor insurers are likely to spend 2.9 billion euros more on claims, administration and sales this year than they earn in premiums. According to Hannover Re, average claims are likely to become even more expensive in 2024. As a result, the motor insurers' loss will only fall to 2.7 billion euros despite premium increases.
Protection against extreme weather
Hannover Re also expects prices for reinsurance cover to continue to rise in Germany outside the motor business. "We have to assume that the long-term trend towards higher claims payments will continue", said Germany CEO Pickel. The issue of insuring against the consequences of extreme weather such as heavy rain, flooding, storms and hail remains highly topical. It affects private households, trade and industry in equal measure.
In light of the significant increases in claims, repair, and spare parts costs, Hannover Re predicts that insurance premiums for motor vehicles in Germany will continue to rise for several years. To counteract the "massive losses" and ensure the long-term profitability of the motor insurance sector, further price adjustments are considered unavoidable.
To mitigate the financial impact of extreme weather incidents, such as heavy rain, flooding, storms, and hail, insurers like Hannover Re are likely to increase the cost of reinsurance cover outside the motor business, as the trend of higher claims payments is projected to persist.
Source: www.dpa.com
