Car insurance will probably become even more expensive


Lerato Khumalo

The general rise in prices is also affecting car repairs, much to the chagrin of insurers. Falling margins and expensive spare parts are the consequences.

Drivers in Germany will have to prepare for even higher costs for their car insurance next year. This was stated by the President of the German Insurance Association GDV, Norbert Rollinger, on Thursday. “As early as 2024, premiums in this segment are likely to rise by an average of ten percent.”

The reason: last year, increased prices for repairs and spare parts caused car insurers to lose billions. Many providers therefore increased their prices at the turn of the year. However, according to Rollinger’s assessment, car insurers are only expected to return to the black after further premium increases in 2025.

According to the association, the cost of spare parts and repairs is likely to continue to rise this year. Last year, motor insurers spent 2.9 billion euros more on claims, administration and sales than they earned in premiums. “For every euro earned, we spent 1.10 euros,” said Rollinger. What will happen in 2024 will depend primarily on inflation.

The losses in the motor vehicle business also dragged down the result of the entire property and casualty insurance in 2023. The division’s technical profit fell by more than half to 1.5 billion euros, as the GDV announced in Berlin. The industry expects a further increase in premiums for the current year.

Similar to car insurance, building insurance is also likely to increase by an average of around ten percent, said Rollinger. The Christmas floods are unlikely to cost insurers as much as expected, at 200 million euros, as there was less damage to buildings, said GDV General Manager Jörg Asmussen. The fact that the sum is not higher is also due to the low prevalence of natural hazard insurance.

Normal building insurance does not pay for flood damage. According to the association, for example, in Lower Saxony and Bremen only around 30 percent of houses are insured against natural hazards. Nationwide, the figure is now 54 percent.

When insurers increase premiums, they usually notify you in writing. If the cost of car insurance increases, drivers should pay attention to the reasons why the premium has been increased. A special right of termination is excluded in the following cases:

If the insurer increases the premium for reasons other than those mentioned above, you have a special right of termination within four weeks of receiving the notification.

According to the German Insurance Association, German insurers increased their total premium income by just 0.6 percent to just under 225 billion euros last year. While income in the property and casualty business grew by 6.7 percent to 84.5 billion euros, it fell by 5.2 percent to 92 billion euros in life insurance.

The GDV was more optimistic about the current year. In life insurance, the increased interest rates and thus higher surplus participation should stop the decline in premiums.