German auto insurers incurred a billion-dollar loss in 2023. The technical deficit amounted to around 3 billion euros, slightly higher than forecasted in the summer, according to the statistics presented by the German Insurance Association (GDV).

The loss and expense ratio for the largest segment in property and casualty insurance soared to 110%. The inflation-driven rise in car repair costs could not be offset by the recent, very moderate premium increases by motor vehicle insurers. GDV President Norbert Rollinger, also CEO of R+V, anticipates no profits in the current cycle for auto insurance, despite expecting a 10% increase in premiums in this segment. "The year 2024 will probably not be sufficient to return the segment to profitability", states Rollinger.

However, the cash cow of the insurance industry, property and casualty insurance, managed to reach the profit zone last year – albeit much narrower than in previous years. The loss and expense ratio increased to 98%, resulting in the technical profit of the segment halving to around 1.5 billion euros. Damage payments increased by almost 13%, while premium income only rose by just under 7%.

The overall growth of the German insurance industry was somewhat more restrained than forecasted in the summer. The premium volume increased by only 0.6% to nearly 225 billion euros, falling short of the 1.3% predicted by GDV in late July. Particularly, life insurance moved backward due to a further decline in single premium business for the third consecutive year, with premiums decreasing by over 5%. GDV Managing Director Jörg Asmussen expressed more optimism for 2024, predicting a stabilization of premium income in the life insurance sector.

Insurers, especially in life insurance, are closely watching legislative conditions. With the focus group on retirement provision at the Ministry of Finance in 2023, momentum came into the debate about the reform of subsidized private insurance aimed at revising or replacing the controversial Riester pension. GDV expects a legislative process for the summer and has specific wishes, specifically concerning the payout phase. The association advocates prioritizing lifelong annuities.

Changes are also underway in occupational pension schemes. The Ministry of Labor is expected to present a small amendment to the Company Pension Strengthening Act in the spring, and GDV hopes for an expansion of the social partner model. However, this model, which is not yet well-established, faces opposition from employees. In October, the IG Metall union voted against models without guarantees, such as the social partner model.

GDV is seeking closer ties with politics, particularly in property insurance. Rollinger and Asmussen emphasized the desire to enter into public-private partnerships for additional risks. For natural disasters, where the association opposes mandatory coverage, GDV calls for state liabilities for natural catastrophes with damages exceeding 30 billion euros.

For cyber risks, insurers would also like to enter into a public-private partnership (PPP). Nonetheless, both initiatives are considered more long-term and are not realistic in 2024. Regarding the existing cooperation between insurers and the state in terrorism insurance through the Extremus society, Asmussen expects a prolongation in 2024. The GDV's main executive expressed his intention to retain his position after his current contract expires in 2025.