Insurance costs more – economy

The general increase in prices is increasing the amount of damage. The result is higher contributions for policyholders

In the coming months, consumers can also expect higher insurance prices. Higher prices are “essential” in both primary insurance and reinsurance, Michael Pickel, Hannover Re’s head in Germany, said on Monday.

The triggers are essentially two factors: inflation and nature. Insurance is not energy intensive or high delivery costs, but general inflation is increasing claim amounts. And the greater the damage, the higher the costs for insurers that pay for repairs or compensation for damages. Along with Munich Re and Swiss Re, Hannover Re forms the trio of the world’s three largest reinsurers, with which primary insurers such as Allianz, Generali and Axa take out insurance.

A good example is auto insurance, because even before the current phase of high inflation began, the prices of spare parts were rising sharply every year. If auto insurers don’t want to suffer losses, they are forced to raise prices themselves.

On average, rate increases in the double-digit percentage range are necessary for motor vehicle insurance, according to a presentation by E+S Rück, which is owned by Hannover Re. As Germany’s largest motor vehicle reinsurer , E+S Rück has a good understanding of the fee structure of primary insurers such as Huk Coburg and Allianz.

“This has a lot to do with the fact that prices for replacement parts have increased, and both new and used cars have become significantly more expensive.” Thomas Bluck

“It can be assumed that this year will probably bring a technical loss for the direct insurers in the car business,” Thomas Blunck, a member of the Munich Re Management Board, predicted last week. “This has a lot to do with the fact that prices for replacement parts have increased, and both new and used cars have become significantly more expensive.” The logical consequence is more expensive motor vehicle policies. This applies not only to new contracts, but also to existing contracts.

In other areas, claims are also rising without inflation, especially costs caused by natural catastrophes. “While images of last year’s devastating flood are still on our minds, this year’s winter storms, droughts and forest fires show that natural disasters are on the rise in Europe,” said Pickel, manager of Hannover Re .

Internet crime has been on the rise for years, resulting in increasing cyber insurance losses. Some niches are also very damaging, such as managers’ liability, which companies conclude for their executives.

This creates a reciprocal price spiral: high inflation and high natural catastrophe losses lead to increased costs, part of which direct insurers pass on to their reinsurers. The reinsurers then raise their prices for the insurers, who in turn try to make more money from customers.

Reinsurers reduce their coverage

Apart from that, another mechanism contributes to making insurance more expensive: according to Swiss Re, some reinsurers are reducing their “capacity”, which means that reinsurers offer primary insurers less coverage or fewer reinsurance contracts overall for Control your own risks. hold. As a result, primary insurers have to bear more of their risks themselves and have to make financial provisions for this. Swiss Re had already asked its clients to take more risks on their own.

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