The latest market snapshot from GlobalData;
The German general insurance industry is set to grow at a compound annual growth rate (CAGR) of 5.5% from EUR149.7 billion ($152.8 billion) in 2023 to EUR195.5 billion ($205.2 billion) in 2028, in terms of direct written premiums (DWP), forecasts GlobalData, a leading data and analytics company.
GlobalData’s Insurance Database reveals that the general insurance industry in Germany is expected to grow by 5.4% in 2024, supported by an increase in motor vehicle sales, rising demand for natural catastrophic (Nat-Cat) insurance policies, and an inflation-led rise in premium rates across most general insurance lines.
Sneha Verma, Insurance Analyst at GlobalData, comments: “The growth rate of Germany’s general insurance industry is expected to remain consistent between 5-6% during 2023-28. It will be primarily supported by health and property insurance, driven by the post-COVID-19 pandemic increase in health awareness and increasing demand for nat-cat insurance policies.”
Personal Accident and Health (PA&H) insurance is the leading line of business, accounting for a 37.7% share of the general insurance DWP in 2023. PA&H insurance is expected to grow by 3.8% in 2024 and 4.2% in 2025, supported by an increase in health awareness after the pandemic that has led to a surge in the demand for health insurance policies.
An increase in premium rates due to the rising cost of claims driven by inflation will also support the growth of PA&H insurance. According to the German Insurance Association, private health insurance premium is expected to increase by 4% to 5.5% in 2024. PA&H insurance is projected to grow at a CAGR of 4.4% during 2023-28.
Motor insurance is the second largest line of business, accounting for a 21.0% share of the general insurance DWP in 2023. Motor insurance DWP grew by 1.8% in 2023, supported by an increase in total vehicle sales. According to the Federal Motor Transport Authority, vehicle sales increased by 7.2% to 2.84 million in 2023 from 2.65 million in 2022. The trend is expected to continue in 2024.
Verma adds: “In addition to vehicle sales, an increase in premium prices due to inflation will also support motor insurance growth. An extended period of high inflation has resulted in an above-average increase in spare parts and repair costs, leading to a higher cost of claims. This has impacted insurers’ profitability, leading to the combined ratio for the motor insurance industry surpassing 100% in 2022 for the first time in the last 10 years. Motor insurance is expected to grow at a CAGR of 2.2% during 2023-2028.”
Property insurance is the third largest line, accounting for an 18.8% share of the general insurance DWP in 2023. Property insurance grew by 8.6% in 2023, driven by the demand for home insurance, which accounted for 51% of the property insurance premiums in 2023.
Germany is vulnerable to extreme weather events, which have led to a surge in the demand of nat-cat insurance policies. Also, the rising cost of claims due to inflation has led to an increase in property insurance premium rates, which will support property insurance growth. Property insurance is expected to grow at a CAGR of 7.5% during 2023-2028.
Liability, Financial Lines, Marine, Aviation and Transit (MAT), and Miscellaneous insurance accounted for the remaining 22% of the general insurance DWP in 2023.
Verma concludes: “A recovery in the economy and increasing health awareness will continue to support the growth in the German general insurance industry over the next five years. A persistent high inflation and frequent occurrence of nat-cat events will impact insurers’ profitability and push up premium prices in the short term.”
Be the first to comment