Why are insurance premiums increasing

Why are building insurance premiums increasing?

The overview of the General Association of the German Insurance Industry, GdV, shows the cost side of the industry. In 2010, for example, insurers had to pay 112.20 euros for the compensation of the damage for every 100 euros they received in premiums. In 2016 you had a three percent surplus.

What are the reasons for the premium increases?

There are several reasons for post adjustments. The residential building insurance pays out according to the sliding new value. This means that in the event of a total write-off, a building will be rebuilt as it was built at the time. However, the building materials have changed, the personnel costs have risen, in short, the insurance sum agreed upon when it was created would no longer be sufficient today to restore the property one-to-one. The premium adjustments, on the other hand, were less than the increases in construction costs.

Another cause lies with the property owners themselves. Those who live in a 60-year-old property will rarely think of replacing all of the tap water pipes without cause. The effort for this would run into the thousands, the property would be partially uninhabitable.

The result is that the existing pipes become too old and tap water is damaged. The construction boom after the Second World War harbors a certain risk potential. In addition, many single-family houses from the 1950s did not use the best materials. The “investment backlog” for many homeowners then inevitably leads to an increasing number of insurance claims.

A third reason is the increased number of storms in recent years. The number of storm damage in 2013 was many times that of 2009. Storms like Kyrill tore holes not only in the roofs of numerous houses, but also in the coffers of insurance companies.

Similar to motor vehicle insurance, the previous premium model of low price insurance is no longer tenable. Comprehensive benefits in the event of damage will continue to require that these remain affordable for the insurer.