Drivers will have to pay significantly more for insurance in 2024. “We expect tariff measures of around ten percent for the overall market for motor vehicle liability and fully comprehensive insurance,” says Stefan Schmuttermair, motor vehicle expert at E+S Rück. E+S Rück, a subsidiary of Hannover Re, insures many motor vehicle insurers against major losses and therefore keeps a close eye on prices. Motor vehicle insurance plays a big role at the current reinsurance meeting in Baden-Baden.
The so-called changing season begins in these weeks. Most drivers can cancel their policies until the end of November and insure themselves with another company for the coming year. The pressure on providers to increase prices is high. After the two low-accident pandemic years of 2020 and 2021, the number of damages is increasing again. They are also becoming more expensive because the prices for spare parts and workshop costs are skyrocketing. Natural disasters such as hailstorms also cost a lot of money.
Industry experts had warned that prices should rise by ten percent this year, but little has happened. The average premiums for motor vehicle liability rose by two percent and for fully comprehensive insurance by 3.6 percent. The fierce competition is to blame. “Although the insurers have increased premiums for existing customers in a disciplined manner, they have made attractive competitive offers for new business,” says Schmuttermair. This meant that customers didn’t even have to look for another provider; a call to their existing vehicle insurer was enough.
In 2024 the bill won’t look much better
For insurers, this means “historically negative results,” said Schmuttermair. This year their loss will amount to almost three billion euros. Some of it is offset by capital gains. But they are rather meager, especially in the heavily loss-making comprehensive insurance division.
In 2024 the bill won’t look much better. In order to achieve a balanced result, premium increases of around 20 percent would actually be necessary. At ten percent, insurers will end up with a loss of 2.7 billion euros. Schmuttermair is of the opinion that it will take around three years until motor vehicle insurance is profitable again.
In Baden-Baden, reinsurers meet with their customers, i.e. insurers such as Allianz or Gothaer, who buy protection against major losses from them. In the past two years they have had to pay significantly more for this. Reinsurers also want to raise prices further this year. But the situation has changed somewhat. Jan-Oliver Thofern from broker Aon Germany expects that the discussions will be more positive for customers.
The price increases of the past few years are ensuring good results for reinsurers. World market leader Munich Re increased its profit forecast for the current year on Monday. The people of Munich now want to earn 4.5 billion euros for the year as a whole. So far they have assumed four billion euros. According to preliminary figures, Munich Re has already generated a profit of 3.6 billion euros in the first nine months of the year.