Car owners must expect higher premiums for their car insurance. Now this insurer also wants to adjust its prices again.
Germany’s largest car insurer, Huk Coburg, has announced that it will further increase prices in the motor vehicle division due to high losses. Although the company was able to almost double its net profit in 2023 from 146 to 298 million euros due to good capital results, the motor vehicle division posted a deficit of almost 547 million euros.
The largest German motor insurers met in October last year because the industry was in the red. Above-average increases in spare parts and repair costs led to “massive losses” for motor insurers, said Hannover Re Germany boss Michael Pickeln at the industry meeting in Baden-Baden. Premium increases in the double-digit percentage range are necessary to make the business profitable again in the long term.
On Tuesday in Munich, Huk CEO Klaus-Jürgen Heitmann blamed the increase in spare parts prices as well as higher damage caused by storms and an unexpectedly high number of accidents and other damage reports from customers.
With 13.9 million insured vehicles, Huk is the market leader in car insurance in Germany, ahead of Allianz. The company has already increased prices for existing customers by a total of 15 percent in two rounds at the end of 2022 and the end of 2023. It will not stop there, the management made clear.
“We assume that, given the earnings and profit situation, we will definitely see further rounds of premium price adjustments like this year next year, and possibly the year after that,” said Jörg Rheinländer, the board member responsible for the property and casualty division.
Other insurers also have to adjust their prices
Huk is by no means the only insurance company whose motor vehicle division is currently in the red. Back in January, the president of the German Insurance Association GDV, Norbert Rollinger, predicted that premiums in the motor vehicle insurance segment would rise by an average of ten percent. Motor vehicle policies account for more than half of the total revenues of the Coburg-based group.
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 car business in 2023 was not entirely positive for Huk in other respects either. In total, the group concluded 1.4 million new car contracts – but at the same time, over 1.2 million contracts were lost because customers looked for other insurance.
On balance, Huk only gained a good 183,000 new vehicles. The reason for this is that after price increases by the insurance provider, customers have a special right of termination. Many then switch to a cheaper policy with another insurer.
Business was going well in all other business areas of the company. Therefore, there is no reason to complain, says Heitmann. According to him, premium income from all divisions rose by 6.2 percent to nine billion euros. The bottom line is that the annual profit of 300 million euros was therefore twice as high as in 2022.