Drivers in Germany face higher insurance premiums

German drivers should brace for higher auto insurance premiums

Germany’s annual inflation was 10.9% in September at the fastest pace in more than a quarter of a century. German drivers should be prepared to pay high insurance premiums. As the past three years of price decline continues, the increase in insurance premiums is inevitable. Drivers must be content with soaring fuel costs, parts shortages, and long waiting times to buy new vehicles.

Drivers in Germany face higher insurance premiums
Image credits- CarSiFu

Chief executive of Germany’s market leader for car insurance HUK-Coburg, Klaus-Juergen Heitmann said price increases can be expected at the turn of the year. “Some insurers have already announced increases.” Further added, “Whether the expected jump in revenues (in2023) is enough to avoid being in the red remains to be seen.” Rising repair costs are making it difficult for car insurers to be profitable, and Heitmann predicted HUK-Coburg’s operating profit for car insurance in 2022 would be around zero.

Soaring prices of EVs

In September is was revealed that the energy costs and the prices of electric vehicles are also going to be increased. A rise in electricity prices as well as in raw material costs and availability, a chronic shortage of parts, and a widespread reduction in disposable income are having a considerable impact on the production and sales of cars.

If the trend continues, there is also concern that there will be a knock-on effect on investors who will lack incentives to build charging facilities, making electric cars less attractive – because they would be more impractical – to run.

Until recently ownership of electric cars had been gaining in attractiveness as the cost of petrol rose. But since recent rises in electricity prices – in Germany of around a third compared with a year ago – the price differential has shrunk.

According to the automobile economist Stefan Bratzel, development is an immediate threat to the industry. “The electricity price explosion could end up being an acute danger for vehicle transition, and we need to be damn careful about it,” he told German media. “If electric cars become more expensive to use, the surge in electric mobility is in danger of collapsing, because hardly anyone is going to buy an electric car,” Bratzel, who is also the founder of the Center for Automotive Management (CAM), said. He and other electric car advocates are now calling on the German government to ensure that the electricity price remains under the price of petrol, which they say is crucial to the future of electric cars. In Norway, where the government was an early adopter of financially incentivizing electric car purchases and putting in place a widespread charging network, 64.5% of new cars registered last year were electric vehicles.