German insurance industry could grow to $229.6 billion by 2026
A recent study from GlobalData predicts the German general insurance industry could grow at a compound annual rate of 6.8% over the next five years.
While the German general insurance industry saw a contraction of 2.1% in 2020, likely due to the pandemic, the industry is expected to bounce back and continue to grow over the next several years, says a new report from data and analytics company GlobalData.
This growth could lead to significant monetary gains in the industry, and GlobalData predicts the German industry will see a compound annual growth rate, in terms of written premium, of 6.8%, from $165.4 billion in 2021 to $229.6 billion in 2026.
“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,” GlobalData Insurance Analyst Ashish Raj said in a release.
According to Raj, personal accident and health (PA&H) insurance accounts for the largest share of Germany’s general insurance industry with a 38.8% share of direct written premium, followed by motor insurance at 23.4% and property insurance at 17.2%. Liability and miscellaneous insurance made up the remaining 14.4% share in 2020.
PA&H insurance saw growth of 3.6% in 2020, despite a decline in the industry overall during that time, likely driven by increased heath awareness and healthcare costs during the pandemic. GlobalData’s analysis found increased health claims during the pandemic drove an increase in premium prices as a result of a 4% bump in incurred loss for insurers in 2020.
Motor insurance also saw slight growth in the German market in 2020, of about 1.1%, which GlobalData attributes to a recovery in the sale of vehicles after the pandemic’s initial slowdowns. They expect the numbers for auto lines will continue to rise in the coming years.
“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,” Raj explained in the release. “As a result, motor insurance is forecast to grow at a CAGR of 4.5% during 2021-26.”
Property insurance is expected to climb at a compound annual growth rate of 9.4% through 2026, GlobalData says, which will be driven by an increase in property sales due to low interest rates for property and mortgages.
“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,” Raj concluded in the release. “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.”