Tryg A/S may have to hike insurance premiums on electric cars again for the segment to remain profitable in the future, CFO Christian Boris Baltzer told analysts during a third-quarter earnings call.
The insurer already increased prices for electric vehicles by over 50% two years ago, but may look to further increases to cover the cost of repairs, which are considerably higher than for ordinary cars, he said.
"We'll push through necessary both price increases and procurement initiatives to make sure that electrical vehicles also will be a profitable book going forward," he said.
CEO Morten Hubbe said car repair shops able to handle electric vehicles leads to a less efficient procurement process and a "monopoly" among certain firms, increasing repair costs.
Tryg is also looking into a number of initiatives to revive its flagging corporate insurance segment, which is "under pressure" and suffering from low profitability, Hubbe said. In particular, Tryg is looking to increase prices in the corporate segment in Norway, which has seen four years of declining profits, Hubbe said.
The technical result for the corporate line during the third quarter was 91 million Danish kroner, compared with 117 million kroner in the same period of 2016. The private insurance segment's technical result was 463 million kroner, compared with 447 million in the third quarter of 2016, while the technical result for commercial, which focuses on small and medium-sized businesses, was 175 million kroner, up from 142 million kroner.
Tryg is also conscious of not having invested in developing its corporate lines as much as private lines, Hubbe said. The insurer is now looking to remedy this by investing in "a number of large, two-digit million projects" that have been given the green light in the past five to six months to improve processes in corporate, Hubbe added.
It will be around three years before the profitability of the corporate segment in Denmark catches up with private, he said.
Overall, the insurer made a third-quarter net profit of 671 million Danish kroner, compared with 732 million kroner in the same period of 2016. Tryg will pay a quarterly dividend of 1.60 kroner per share on Oct. 13.
The company's solvency ratio stood at 211% at the end of the third quarter after the deduction of the dividend, up slightly from 209% at the end of the second quarter.
As of Oct. 9, US$1 was equivalent to 6.34 Danish kroner.