Drivers in Germany must prepare themselves for significantly higher premiums for their third-party liability and comprehensive insurance policies in view of the billions lost by motor insurers.

The German Insurance Association (GDV) predicted on Thursday in Berlin that premiums in the industry would increase by ten percent. How premiums actually develop, however, is a matter for the individual companies. However, GDV President Norbert Rollinger believes that this jump in premiums will not be enough for motor insurers to be back in the black in 2024: "We will need another year."

Last year, the industry generated an underwriting loss of around 2.9 billion euros with motor vehicle policies. "Every euro received was offset by expenses of 1.10 euros," said Rollinger at the GDV's annual press conference. "It is also to be feared that repair costs will continue to rise." The prices for spare parts, but also for higher labor costs in the workshops, have been causing problems for insurers since the end of the coronavirus pandemic. Claims costs rose by 12.7 percent in 2023. However, only a portion of the premium increases will reach the providers, as drivers take the opportunity to switch to another insurer that offers lower prices for new policies.

The red figures in motor vehicle insurance had an impact on property and casualty insurance, whose largest line of business is car policies. Profits there slumped by more than half to 1.5 billion euros in 2023, although premiums grew by 6.7 percent to 84.5 billion euros. The GDV predicts an increase of 7.7 percent for 2024.

Overall, the insurance industry in Germany barely grew in 2023. Premiums rose by 0.6 percent to 224.7 billion euros. The reason for this was the weakening business with single-premium life insurance policies, i.e. pure investment products, which were less in demand due to rising interest rates and more attractive competitive offers from banks. In the middle of the year, GDV had predicted premium growth of 1.3 percent across all sectors. Association President Rollinger was nevertheless "quite satisfied" in view of the difficult environment. For 2024, he expects premium growth of 3.8 percent.

To achieve this, however, the downward trend in life insurance must be halted. Here alone, premium income fell by 5.2 percent in 2023 - more than expected. GDV blames the economy, weak wage development and consumer restraint for this. Managing Director Jörg Asmussen is more confident for the current year, now that insurers have taken countermeasures with higher interest rates and shorter product terms. However, it can be assumed that the central banks will keep their interest rates stable at least until the middle of the year, which makes short-term investments more attractive than lifelong pension insurance policies. Asmussen hopes that "on the whole, contributions will be in the black".

(Report by Alexander Hübner. Edited by Ralf Banser. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)