Munich, October 4 – German drivers will have to prepare for higher car insurance costs next year. “Price increases are expected in the market at the beginning of the year. Some insurers have already announced increases,” market leader HUK-Coburg’s board spokesman Klaus-Jürgen Heitmann said in an interview with the Reuters news agency published on Tuesday. For three years, car premiums have collapsed, now there should be a change. “It’s worth consumers taking a closer look.”
But despite the rises, motor vehicle insurers threatened to slip into the red: “It remains to be seen whether the expected jump in sales will be enough to avoid the red,” said the 54-year-old, who has been running HUK- Coburg since 2017. The profit situation in the industry is already tense this year due to rising repair costs: “The combined rate on the market will be around 100 percent, and we will also end up in the black in operational terms “.
Lockdowns in the corona pandemic have caused traffic and thus accidents to drop significantly in the last two years. Mutual insurers like HUK-Coburg had even repaid some of the contributions. But now the return to normality is taking hold: “The claim frequency is still well below the values before the Corona crisis, but it is increasing significantly,” said Heitmann. “And property damage settlement is sometimes more expensive at double-digit rates.” This applies above all to spare parts, which accounted for half of the damage costs. However, inflation will also gradually affect personal injuries, for example through additional costs for rehabilitation measures.
Reinsurers, to whom direct insurers pass part of their costs, recently announced price increases on motor vehicle policies. At the same time, given the declining number of new registrations and transfers of ownership, the pie to be shared is getting smaller. “We’re also feeling the strain from the auto market,” Heitmann said. Private car stock is stagnating, so HUK-Coburg will only grow two percent in 2022, less than usual. “Our combined index will deteriorate this year. And there are also charges on capital investment. Profits will drop noticeably.” Last year, pre-tax profit rose 8 percent to €629 million.
“ARE WE FAST ENOUGH?”
Auto insurance makes up the majority of HUK-Coburg’s business. With 13.5 million customers, it is clearly ahead of Allianz. But Heitmann is concerned about the future of auto insurance: Megatrends such as autonomous driving, electrification and changing attitudes toward car ownership have led to lower costs but also an accelerating decline in business. “Automotive will change, but we don’t know when. Auto insurance will become less important to customers’ wallets, so consumers will be less concerned about it.”
That is also the reason why HUK-Coburg is also moving into the neighboring business areas, has bought a car dealership and taken a stake in the Pitstop garage chain. “We have millions of contacts with people who are buying a car. And we have a lot of data on these cars,” said Heitmann. This could give the company advantages in the used car trade, for example. “It is true that so far we have been advancing step by step,” admitted the HUK boss. “It’s a question of mentality. But we ask ourselves: are we fast enough there?”
HUK-Coburg: Car insurers are threatened with red numbers in 2023
Cover photo: Symbolic photo
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