German motor vehicle insurers are expected to make a loss of up to EUR 2 billion this year, thus witnessing a second year of negative balance, a top representative of the German Insurers’ Association (GDV) said.

According to the GDV projections, premium income will rise to around EUR 33.6 billion, claims and administration expenses are expected to reach between EUR 34.9 and 35.6 billion. In 2023, motor vehicle insurers had to accept a loss of over EUR 3 billion.

The current poor profitability of the LoB is the result of the repair costs increasing for several years. “Both the spare parts and the work in the vehicle workshops are becoming increasingly expensive. This year, average property damage in a car's motor vehicle liability insurance is expected to cost around 4,000 euros. In 2014 it was still 2,500 euros,” explained GDV Managing Director, Jörg Asmussen.

How the current situation will affect motor vehicle insurance premiums is a company-specific decision for each individual insurer and not a matter for the association, is the GDV standpoint. “But of course there is a connection between the development of claims and the premiums for motor vehicle insurance,” says Asmussen. In addition, the insurance regulator BaFin also expects motor vehicle insurers to take appropriate account of claims inflation when calculating their premiums.

While this trend is not exclusively impacting the motor insurance business, it is obvious that inflation continues to be challenging.