Hannover Re forecasts flat renewal season
Hurricanes Matthew and Nicole will not have a big impact on pricing in this renewal season, according to Axel Freiboth, managing director and chief underwriting officer of Hannover Re’s North American treaty division.
According to Freiboth, the severity of the hurricanes was not sufficient to move the market in a significant manner, although he did agree that there might be small rate increases for some coastal areas of Florida and the Carolinas as well as in Texas following the loss activity in the state.
However, he did see some signs of movement in other areas. “We’ve seen an uptick in individual severity claims, whether it’s property per risk claims or individual large workers’ compensation claims,” he told PCI Today.
“The commercial auto market has been under pressure for a while already and certainly there is a focus on commercial auto by insurance companies and reinsurers.”
He added that while Hannover Re has always taken a very cautious look at any auto business, the company was watching this area carefully and trying to provide solutions to its clients.
Asked how the company views the recent discussions on the potential impact of driverless cars, Freiboth said that any potential threat also creates opportunities. Therefore, the perspective depends on the viewpoint of those looking at the market at the moment.
“It certainly will change some of the dynamics in the commercial auto market, but also in the personal auto market,” he said.
“It will also create opportunities if you look at usage-based insurance, which is increasing, and that in itself has unique risk characteristics that need to be looked at.”
He explained that this dynamic would change the way in which a typical motor policy works.
“If you were looking at a vehicle and the usage of that vehicle tied to a family, now all of a sudden you have to focus on individual drivers and their usage of vehicles, which is changing. So the ratings of any auto business will definitely change in that respect,” he said.
Freiboth pointed out that a lot of insurance companies are now looking into this to see if they can make it work in order to get on the right side of things as this area continues to develop. However, he added, it was still uncertain as to how things will eventually shake down in terms of the final picture for driverless cars.
