Germany’s property and casualty insurers delivered a sharp improvement in underwriting results in 2025, supported by €2.6 billion in natural catastrophe claims, less than half the €5.5 billion recorded a year earlier.
Preliminary data published by the German Insurance Association (GDV) show the sector’s gross combined ratio declined to 91% in 2025 from 96% in 2024. Pricing increases across most major lines offset claims inflation, while unusually low catastrophe losses reduced overall loss pressure. GDV reports results on a gross basis, excluding reinsurance, and combined ratios net of reinsurance are expected to sit several percentage points higher given the limited catastrophe activity during the year.
The reduction in catastrophe losses follows several years of elevated weather-related claims and ongoing debate in Germany over how natural hazard risks should be insured and financed. Following the 2021 Ahr Valley floods, policymakers and the insurance industry have discussed changes to coverage structures, including opt-out models for natural hazard insurance and new market-based reinsurance mechanisms. In late 2025, GDV presented a framework for a nationwide safeguard system centered on a private reinsurance vehicle, Elementar Re, which would rely on insurer reserves and private reinsurance before a state stop-loss applies beyond losses of €30 billion, according to the association.
Within the 2025 P&C results, motor insurance accounted for a substantial share of the underwriting recovery. The gross combined ratio for motor business declined to 96% from 104% a year earlier. Motor premiums rose by 14% during the year, while the average premium per policy increased by 13%. Claims inflation remained elevated. Motor repair costs increased by 5.2% in 2025, following increases of 5.6% in 2024 and 8.5% in 2023, largely driven by spare parts prices and repair expenses.
Regional loss experience continues to influence motor pricing dynamics. GDV data show accident and damage costs remain highest in large urban areas, with Offenbach and Berlin recording damage levels roughly 40% above the national average, while regions such as Brandenburg and Schleswig-Holstein post materially lower claims frequency. Annual regional reclassification continues to redistribute pricing pressure across policyholders, particularly following weather-related losses.
Homeowners’ insurance recorded one of the strongest underwriting shifts in 2025. The gross combined ratio declined to 90% from 100% a year earlier, driven primarily by subdued catastrophe losses, which typically account for a significant share of claims in this segment. Premium growth slowed to 7% from 13% in 2024, reflecting weaker price increases tied to inflation indices. Building costs increased by 2.2% in 2025, while estimated premiums per policy rose by 6.6%. Claims inflation moderated during the year, although Germany’s aging building stock continues to affect claims frequency.
Gross written premiums across the P&C sector reached €99.7 billion in 2025. Motor insurance accounted for €38.6 billion, homeowners’ insurance for €29.1 billion, with the remainder spread across other commercial and personal lines. GDV expects premium growth to slow in 2026 as claims inflation eases and economic growth remains moderate.
The improving underwriting outcome in 2025 contrasts with rising attention to long-tail liability risks elsewhere in the German insurance market. In April 2025, GDV issued non-binding model clauses allowing insurers to exclude damages linked to per- and polyfluorinated alkyl substances, or PFAS, from liability and environmental policies unless explicitly agreed. The move follows growing concern over potential litigation exposure, with some market observers warning that PFAS-related claims could exceed historic asbestos liabilities.
Life insurance recorded continued premium growth in 2025, driven largely by single premiums. Gross written life premiums reached €64.5 billion. Single premiums increased to €32.1 billion, while regular premiums remained largely flat. Guaranteed interest rates on new life policies increased to around 1.0% from 0.25%, while bonus rates in many cases approached 3%. Long-term interest rates at year-end exceeded levels seen in 2022, supporting investment returns. GDV did not publish profitability indicators for the life sector.
Outlooks for both the P&C and life insurance sectors remain stable. GDV data indicate that the 2025 underwriting outcome was shaped by limited catastrophe losses, with a return toward more typical loss patterns expected following a year of unusually benign natural hazard activity.
