In 2025, German non-life insurers maintained strong underwriting discipline despite achieving very strong underwriting profitability, according to Fitch Ratings.
In a recent report, Fitch said German non-life insurers outperformed expectations in 2025. Nevertheless, the ratings agency is maintaining its forecast for the sector’s net combined ratio at 95% for 2026, up from 92% in 2025, with the net combined ratio expected to remain stable in 2027.
Fitch believes that rate increases will no longer exceed growth in claims, resulting in stable underwriting earnings.
Fitch maintains its forecast for sector premium growth of 4% in 2026 and also expects stable growth of 4% for 2027.
The sector’s net underwriting result is estimated at EUR 6.6 billion for 2025, supported by below-average natural catastrophe claims. Fitch expects the normalised natural catastrophe result to be between EUR 3.5 billion and EUR 4 billion in 2025. For 2026, the net underwriting result is forecast at EUR 4 billion, rising to EUR 4.5 billion in 2027.
Higher reinvestment rates than those on maturing fixed-income investments will continue to support profitability. Fitch expects investment returns to increase to 2.8% in 2026 and 2.9% in 2027.
Fitch noted that if premium growth falls below 2% or claims inflation significantly exceeds expectations, the net combined ratio could exceed 95% in 2026, while the net underwriting result could fall to around EUR 3 billion.
In addition, Fitch said a sustained increase in small- to mid-sized natural catastrophe events would constrain insurers’ underwriting profitability. Insurers have retained more natural catastrophe risk on their balance sheets in recent years due to rising reinsurance costs. Fitch expects non-life insurers’ results to become more volatile and be negatively affected by a higher frequency of small- to mid-sized natural catastrophe events. This volatility is expected to be reflected in the 2026 net combined ratio, extending a trend seen over the past two years.
The ratings agency also considers regulatory oversight in Germany to be very strong.
Fitch believes the German insurance market is technically highly sophisticated, underpinned by strong and generally accepted actuarial practices for underwriting analysis, claims reserving and product pricing.
The market is reasonably diversified between life and non-life lines, with many business lines contributing to premium income. The non-life market also benefits from the fact that large industrial insurers including Allianz Global, Great Lakes and HDI Global are headquartered in Germany.
Fitch views both the German life and non-life insurance markets as highly competitive. Motor tariffs are under pressure as customers increasingly use aggregators to compare prices. The telematic tariff share in Germany is well below European average, driven by the historical granular tariff pricing.
The life insurance market is highly competitive in distribution, reflecting fierce competition between the traditional agent and independent financial advisor channel. It is also fairly fragmented, with the 10 largest insurance groups accounting for around 65% of gross written premiums.
The German financial market has considerable breadth and depth across both its insurance and non-insurance segments. The German stock and bond markets are among the largest globally, providing sufficient liquidity across most traded products. Companies and financial institutions also have strong access to capital markets.
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