Drivers in Germany may have to brace for another round of car insurance price hikes next year. According to Hannover Re, one of the world’s largest reinsurers, the cost of repairing and maintaining vehicles remains so high that insurers see no alternative but to raise premiums once again.
At the annual reinsurance meeting in Baden-Baden, Hannover Re’s Germany chief Thorsten Steinmann said the country’s primary motor insurers were “on a good path to regaining profitability.” However, he added that “further targeted price increases” were still necessary as claim costs continued to grow faster than average. The steep rise in workshop charges, spare parts and long-term medical care for accident victims has kept the pressure on insurers’ balance sheets.
Repair and parts costs remain the main driver
Figures from the German Insurance Association (GDV) highlight the underlying problem. Over the past decade, the price of car parts has surged by more than 80 %, while the general consumer price index rose only about 30 %.
Hannover Re confirmed that this dynamic remains a major cost factor for the sector. As the country’s largest motor reinsurer, the group has deep insight into the calculations of major players such as Allianz and HUK-Coburg. The reinsurance specialist said that both new customer and existing policyholder rates are under review, meaning that even loyal customers may soon see their premiums rise.
Billions in losses and a fragile recovery
The recent history of the motor insurance market has been turbulent. In the last two years alone, German insurers spent around five billion euros more on claims, administration and sales than they collected in premiums, according to GDV data. The price increases introduced in 2024 helped ease the pressure but were not enough to cover the soaring expenses.
Now, both GDV and Hannover Re expect a return to profitability in 2025, with the sector moving back into the black after a string of losses. Still, the upward trend in costs means that premiums are likely to rise again in 2026, even as the industry recovers on paper.
Why Baden-Baden matters for your wallet
Every autumn, the picturesque spa town of Baden-Baden becomes the epicentre of global reinsurance negotiations. During the meeting, companies like Hannover Re, Munich Re and Swiss Re set the conditions that will define contracts between reinsurers and primary insurers for the coming year.
These behind-the-scenes deals directly influence the prices German drivers pay for car insurance. With parts, labour and liability expenses all trending higher, most experts now consider premium increases in 2026 unavoidable — a bitter pill for consumers still feeling the effects of inflation.
