Insurance sentiments in Q1 Germany
Insurers in Germany experienced a deterioration in sentiment during the first quarter of 2025, according to a recent survey conducted by the Ifo Institute and reported by the German Insurance Association (GDV). The business climate index, which measures the financial prospects of insurers, fell significantly by 7.2 points to 18.0 for the period covering January to March.
"Even insurers are not exempt from the economic slowdown affecting the wider economy," noted Jörg Asmussen, CEO of the GDV. Despite this downward trend, Asmussen expressed cautious optimism, stating, "our sector is well-positioned to move forward."
On a sector-specific front, life insurers remained optimistic about the current business situation and new business operations, as reported by the GDV. However, business expectations for the first quarter saw a sharp decline, falling by 46.2 points to 0.4.
Asmussen attributed this decrease to the weak economic growth forecast for Germany, coupled with persistent global uncertainties. In the property and casualty sector, insurers generally held a more positive view of their current situation, although expectations for future growth were less favorable due to declining claims numbers.
The Ifo Institute reported that their survey of around 150 insurers revealed growing openness among German businesses towards risk mitigation policies, such as a mandatory natural catastrophe insurance scheme. This could potentially have a positive impact on insurers' business environment in the long term.
While the overall economic outlook remains subdued, with GDP predicted to stagnate for a third consecutive year in 2025, there are signs of demand for specialized insurance products like natural catastrophe schemes. The government's fiscal policy and defense/infrastructure spending are expected to contribute to a gradual increase in demand for related insurance services.
Thus, German insurers enter the second quarter of 2025 in an environment marked by a mixed but cautiously optimistic business climate, amid broader economic stagnation. They may focus on adapting to evolving risk perceptions and leveraging targeted insurance products to sustain growth.
"In light of the mixed business climate, the insurers might consider implementing vocational training programs to adapt to evolving risk perceptions and sustain growth within their industry. This could particularly apply to specialized areas such as natural catastrophe schemes, given the growing demand indicators and the government's fiscal policy."
"Moreover, the increasing openness among German businesses towards risk mitigation policies, such as the potential natural catastrophe insurance scheme, presents an opportunity for the industry. Financing for vocational training programs could be a strategic way to capitalize on this acceptance, fostering a stronger connection between the insurers and the community, ultimately benefiting their future business prospects."
