Insurance firms in Germany express their sentiments during Q1
Insurance Sector in Germany Experiences Mood Deterioration in Q1 2025
The business climate among insurers in Germany has worsened at the start of 2025, as indicated by a decrease of 7.2 points in the Ifo Institute's quarterly economic barometer. According to the German Insurance Association (GDV), the index dropped to 18.0 for the period spanning January to March.
Jörg Asmussen, CEO of the GDV, commented on the findings, saying, "Even insurers are not spared from the economic downturn in the broader economy." He added, "However, our sector is well-positioned, and we look ahead with cautious optimism."
The Munich-based Ifo Institute surveyed over 150 insurers across various sectors about their current business situation and future prospects. The life insurance sector mostly reported a positive assessment of its current business situation, particularly in new business, but the sector's business expectation barometer tumbled significantly by 46.2 points to 0.4 in Q1 2025.
Asmussen cited the weak growth forecast for the German economy and ongoing global uncertainty as the reasons for the deteriorating business expectations. In property and casualty insurance, insurers rated their present situation more positively due to lower claim numbers, while their business expectations slid.
In related news, Munich Re, a significant player in the German insurance market, reported a net income of approximately €1.1 billion in Q1 2025, despite facing major loss events such as wildfires in Los Angeles. The company's insurance revenues saw an increase compared to the previous year, and its life and health reinsurance segments showed robust results. Despite elevated combined ratios due to these losses, Munich Re reaffirmed its full-year profit outlook of €6 billion, attributable to favorable market conditions and a high-quality portfolio.
The findings of the Ifo Institute, together with those from key industry sources, suggest a generally positive and resilient German insurance sector in Q1 2025. While facing some challenges, the sector demonstrates profitability and stability, supported by strong corporate performances, solid economic trends, and growth opportunities.
In light of the economic downturn, the German Insurance Association (GDV) has proposed a community policy focusing on enhancing vocational training within the sector, aiming to foster a skilled workforce and ensure business continuity. To further bolster the sector's growth potential, investment in finance and business strategies, such as exploring new markets and diversifying products, is being considered.
