Forecast: The car insurance will again be a bit more expensive

Car insurance premiums will continue to rise in the coming year. However, drivers no longer have to expect drastic price increases. This forecast was given by Stefan Schmuttermair, the Head of Division responsible for motor vehicle business at E+S Re, a subsidiary of Hannover Re. In the current year, the premiums for motor liability increased by four percent, for the partial liability by five and for the full liability by seven percent. The price increase will slow down further, Schmuttermair predicts. Specifically, the car expert expects an increase “in the low to medium percentage range – up to a maximum of five percent”. However, the price increases are likely to be different from insurer to insurer. In its entirety, the industry is again in the profit zone. “But there are still insurers who have not yet restructured their portfolios,” Schmuttermair said. Increased price increases are also possible for them. However, the fact that there is another price war in car insurance excludes both the manager of E+S Re and Leopoldo Camara from Swiss Re. “At most, for individual tariffs that target a very top customer group,” this is conceivable, said Schmuttermair. Price increases have been made up for In the competitive car insurance market, vendors failed to gradually raise prices after the end of the Corona pandemic and ended up in a loss zone. In 2023, the ratio reached 112 percent. This means that insurers had to spend 1.12 euros in premium income for each euro to pay for damages. In 2024, the industry’s losses decreased slightly to a 106 percent loss-to-cost ratio. Only in 2025 did the industry return to profitability, the indicator was 96 percent. However, this was only made possible by massive premium increases, especially for the insurance year 2025. It helped the insurers that the past year, as well as the first half of the current year, was comparatively low in damage. In particular, hailstorms, which cause great damage to car insurers, were rare. In the summer there were hailstorms again. They were particularly violent in Switzerland and Italy, but Germany was not completely spared. However, damage inflation remains an ongoing problem. The rate of inflation for repairs in workshops remains well above the general rate of inflation. Even if a flattening is looming. According to Schmuttermair, the cost of damages in the full scope increased by 7.5 percent last year. In the current year, the reinsurer expects five to six percent. But even in the case of personal injury, insurers have to pay more because of increased health costs. However, car insurers do not have much room for manoeuvre. According to E+S Re, the accumulated technical result of the German car insurers will only earn a profit of 500 million euros. Next year it could only be 200 million euros. The damage-cost ratio will then possibly scratch again at the loss limit. “The earnings situation in car insurance remains fragile,” says Thorsten Steinmann, CEO of E+S Re, summarizing the situation.