Hannover Rück forecasts declining profits for German motor vehicle insurers

Hannover Rück predicts that profits for German motor vehicle insurers will decline significantly in 2026. The industry is expected to earn approximately 500 million euros, which is nearly half of the previous year's earnings. This represents a profit margin of roughly 1.3 percent of premium income, with projections suggesting it could drop to 0.5 percent in the following year.

The primary driver for this decline is the rising cost of repairs and spare parts, which are increasing at a rate significantly higher than general inflation. Data indicates that spare part prices have risen by an average of 5.9 percent annually since 2016, while motor liability premiums have only increased by 2.4 percent. The insurer noted that the situation remains fragile despite recent premium hikes.

This downturn follows a period where the industry only recently returned to profitability in 2025 after three consecutive years of losses. Hannover Rück, a major global reinsurer, provided these forecasts during an annual industry meeting in Baden-Baden.