HUK-Coburg has been the largest car insurer in Germany since 2011. Allianz, the undisputed market leader for decades, has been trying to regain its old position for just as long – without success. That remained the case in 2022, according to the latest figures from bitter competitors.
But even the Franconians, used to success, are currently feeling headwind. In the motor vehicle divisions, HUK-Coburg made a loss in 2022 for the first time in years. And with growth, things don’t go so smoothly anymore either. The group was able to increase sales by 3.5 percent to 8.5 billion euros, but profit after tax plummeted by 62 percent and amounted to a meager 146 million euros in 2022.
However, HUK was able to further expand its lead over Allianz in 2022. The Munich-based company, actually by far Germany’s largest insurer, increased its portfolio of insured vehicles by 1.7 percent to 8.7 million. HUK-Coburg, on the other hand, reported growth of two percent to 13.7 million vehicles – a whopping five million more.
The damage is increasing, as are the costs
But CEO Klaus-Jürgen Heitmanns does not speak of “challenging times” without reason. The repair costs increase noticeably. Above all, the spare parts supplied by the vehicle manufacturers have an impact. The car companies have design protection for all visible parts, and no independent manufacturer is allowed to deliver them to workshops. “It’s a de facto monopoly,” Heitmann complained.
In addition, after the quiet years of the pandemic, there is more damage again. And because of inflation, auto insurers need higher claims reserves: for example, if they set aside money to provide lifelong care for a crash victim, it’s likely that the amount set aside is now insufficient. Eventually prices go up.
Taken together, this leads to a deficit in motor insurance. In 2022, customers paid 4.43 billion euros in premiums, the group spent 4.59 billion euros on damage and costs. There is no way around noticeable price increases, Heitmann is certain of that.
Growth slows
However, that doesn’t exactly help with growth. The group is already growing more slowly than in previous years. The reason: the auto industry. Because fewer new cars are registered, there are also fewer used car sales and purchases in the market. “In terms of the number of vehicle transactions in the 2022 market, we are now below nine million,” he said. “In the last normal year before Corona, that was 2019, there were almost eleven million transactions.”
HUK-Coburg does not insure company fleets and does not cooperate with manufacturers, it has fewer new cars in stock than its rivals. The focus is clearly on used cars.
She also tries to score points outside of the actual insurance. The group operates a used car dealership in Düsseldorf. It has a 25.1 percent stake in the Pitstop workshop chain and offers customers there – and in other authorized workshops – particularly inexpensive services such as repairs and tire or oil changes that have nothing to do with the insurance contract.
More electric vehicles
In order to remain the market leader, the group pays particular attention to new trends in motor insurance. This includes electric vehicles, which are not popular with all insurers. The people of Coburg were able to increase their number of electric vehicles by 57 percent in 2022. They now insure 283,000 cars, 97,000 of which are hybrid cars.
But aren’t electric cars particularly problematic because of the risk of battery fires? CEO Jörg Rheinländer does not believe that. “Cars hardly burn,” he said. “The difference between electric vehicles and other cars is one euro.” A normal car premium of around 350 to 400 euros per year includes three euros for the risk of a fire for an electric car and two euros for conventional cars, he explained.
The insurer wants to attract young drivers in particular with telematics offers. If you drive carefully, you save 20 percent or more. The driving data about the route, acceleration, braking behavior and much more are constantly transmitted to the insurer. In 2022, HUK was able to increase the number of telematics contracts by 50,000 to 500,000.
Telematics are becoming more important
Driving data is collected and transmitted by a thin sticker on the inside of the windscreen. The company does not yet use the vehicle data collected by the manufacturer in new cars, so there must be uniform standards and real-time access to the data. The industry is still in talks with carmakers about this.
“Telematics is extremely relevant for us,” stressed Heitmann. “The telematics score is one of the most valuable tariff features, even when you compare it to other features.” By that he meant regional class, vehicle type, profession and other characteristics.
The company has set itself apart from the industry in one central point. While the federal and state governments have been discussing compulsory insurance against natural hazards for years and the insurers’ association GDV is against it, HUK-Coburg has simply introduced it, without exception.
There is a clear political demand to significantly increase the density of natural hazard insurance in the population, said HUK boss Heitmann.
In addition, the insurer was shocked by the experiences with the flood damage on the Ahr. Homeowners called and explained that all documents had been washed away with the house, and whether they had insurance against such damage. “In not a few cases we had to tell the customer, no, you didn’t take out any elementary damage cover,” said Heitmann.
Elemental protection included
All new HUK contracts in building insurance now include elementary protection that covers buildings with a deductible of 100,000 euros. If the house is totally destroyed, the customer suffers damage of this magnitude, but the insurer pays the cost of more than 100,000 euros.
With their classic elementary damage tariff, only a deductible of 500 euros applies. HUK started selling the contracts in September 2022. So far there are 38,000 pieces. “The nice thing is that 75 percent of all customers choose full protection,” said Heitmann. Without the minimum form of elementary cover, HUK-Coburg no longer wants to sell building policies: So this insurer has introduced the obligation.