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8 November 2016 Insurance

EXCLUSIVE: Carriers face difficult negotiations when seeking industrial fire reinsurance in Germany

While overall conditions for reinsurance buyers are fairly good due to soft pricing driven by overcapacity in the market, primary insurers in Germany may face difficulties to strike a reinsurance deal for industrial fire insurance in the upcoming renewals season.

“In Germany we have a stressed industrial fire insurance market situation,” said Jan-Oliver Thofern, CEO of Aon Benfield Germany.

“To date we have seen significant loss activity both in terms of severity and frequency,” he said.

“Large losses accounted for more than €1 billion in the first half of 2016 alone.”

The fire industrial business is mostly reinsured on a proportional basis in Germany and commissions may come under pressure in the upcoming renewals season.

“The question is how low commission rates can go and still remain acceptable,” Thofern said.

Generally, the reinsurance business is currently a buyer’s market, and primary insurers may want to take advantage of it to mitigate difficulties they face in the life segment, Thofern suggested.

In order to take advantage of the soft market, insurers may want to consider reviewing options towards multi-year arrangements on some of their treaties.

“For cedants it is certainly worthwhile to review again options towards multi-year arrangements on some portion of their covers and look into ways to protect the ever-increasing frequency of natural perils losses,” Thofern said.

This news story is a snapshot of a longer report. To find out more, read the full story here.

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