To widen profits in the cutthroat world of the car insurance market, Allianz AG is building up its ties with Volkswagen AG in Germany as well as in emerging markets. Allianz, the largest insurer in Europe, said that it had signed a letter of intent with Volkswagen Financial Services to expand their sales cooperation agreement.
They also agreed to focus more on the growth markets of Brazil, Russia, India and China. In a statement last Tuesday, Allianz CEO Michael Diekmann said that business with automotive manufacturers is a key global growth market in the highly competitive auto insurance business."
Volkswagen's biggest market is now China, beating out Germany. VW's third largest market is Brazil. Expansion measures are also being done in India and Russia.
For several years, premiums in Germany's 20 billion euro ($26 billion) motor insurance market have been decreasing. In fact, listed insurers such as Allianz, AXA SA, and Assicurazioni Generali S.p.A. are locked in a price war of attrition with mutually owned insurers such as HUK-Coburg AG.
HUK, whose market share has been increasing in Germany, said that price competition will continue to be intense because the market in Germany is not growing.
A HUK spokesman said that the market appears to be divided. Some companies hint that they will stop competing with the same intensity while others have stuck to the policy they've used for the last few years. This spokesman said that prices this year did not seem to have dropped further and in a number of cases had been adjusted upwards. [via autonews - sub. required]