Germany’s general insurance industry is expected to grow at a compound annual growth rate (CAGR) of 6.8%, from $165.4 billion in 2021 to $229.6 billion in 2026 in terms of direct written premium (DWP), according to GlobalData, a leading data and analytics company.
Ashish Raj, Insurance Analyst at GlobalData, comments: “After contracting by 2.1% in 2020 due to the pandemic, the German economy is expected to grow by 2.8% in 2022. The economic recovery is driven by strong government fiscal measures that include increased healthcare spending, short-term subsidies to preserve jobs, grants for small businesses and self-employed persons, and temporary VAT reduction.”
The economic recovery is expected to support general insurance industry growth, which is expected to grow by 4.7% in 2022.
Ashish Raj offers his views on the key segments in the German general insurance industry:
Personal accident and health (PA&H)
“PA&H insurance is the largest general insurance line in Germany, having accounted for 38.8% share of the DWP in 2020. The segment grew by 3.6% in 2020, driven by increased health awareness during the pandemic and rising healthcare costs. The pandemic led to increased health claims, thereby increasing incurred loss for insurers by 4% from $36.8 billion in 2019 to $38.3 billion in 2020. This led to an increase in premium prices. The segment is forecast to grow at a compound annual growth rate (CAGR) of 7% during 2021-26.”
“Motor insurance is the second-largest line, having accounted for a 23.4% share of the DWP in 2020. The segment grew by 1.1% in 2020, driven by a recovery in vehicle sales after an initial slowdown due to the pandemic.
“The government’s push to actively promote the use of electric vehicles and increase its sales to 7–10 million by 2030 will prompt insurers to develop products catering to this segment. As a result, motor insurance is forecast to grow at a CAGR of 4.5% during 2021-26.”
“Property insurance is the third-largest segment, which accounted for 17.2.% of the DWP in 2020. The segment is forecast to grow at a CAGR of 9.4% during 2021-26, driven by an increase in property sales due to low property/mortgage interest rates.”
Other insurance segments
Liability and miscellaneous insurance collectively accounted for the remaining 14.4% share in 2020.
Ashish concludes: “Germany’s economic recovery is expected to remain subdued over the next couple of years due to a surge in fresh COVID-19 cases and the negative impact of the Russia-Ukraine conflict. However, increasing healthcare costs, rising industrial growth, and a boost in demand for real estate will support growth in the general insurance industry over the next five years.”