Munich Re marks new growth frontiers

Reinsurance appetite shows no sign of cooling despite economic strain and climate chaos, with disciplined risk-sharing keeping the market tight. But the real frontier, Munich Re says, lies in cyber, where soaring threats and rising awareness could ignite the industry’s next big growth wave.

Key points:
Reinsurance demand stays hot
Europe faces rising claims
Cyber as the next growth goldmine

“We see increased geopolitical tensions and fundamentally changing trade flows,” said Clarisse Kopff, member of the board of management at Munich Re, speaking at the reinsurer’s Baden-Baden breakfast briefing.

“This may pose significant challenges through disruptions in the supply chain and threats of resuming inflation… and this will likely reach Europe. This is likely to trickle into higher claims costs across lines of business.”

Kopff pointed to a worrying uptick in secondary perils, hail, floods and convective storms, now forming a greater share of loss totals, especially across Italy, Germany, France and Eastern Europe. “Nat cat losses regularly exceed the €100 billion level worldwide, sometimes even getting closer to €150 billion,” she noted. While recent months have been calmer, claims severity “has consistently increased” due to urbanisation, rising asset values and climate change, she added.

Despite the turbulence, Munich Re’s outlook for the upcoming renewal season is resolute: demand remains high, pricing is stable and capacity is available, but only on sustainable terms. “Demand for reinsurance has been consistently above GDP growth and is expected to remain so in the coming years,” Kopff said. “Supply is there also… and as traditional reinsurance offers flexible and easy-to-use capacity, we are well placed to serve that growing demand in Europe.”

When asked whether the market was weakening, Kopff was clear: competition is returning, but discipline stands. “Prices will be a discussion point,” she said, “Although the year is not finished yet because we still have potential climate events in front of us. We consider the market is still priced adequately, if not attractively, and are ready to deploy more capital if terms and conditions are sustainable.”

Still, Munich Re expects reinsurers to share risk sensibly with cedants. “Frequency should first and foremost be managed by primary insurance,” said Claudia Strametz, chief executive Germany, cyber Europe & LatAm, NewRe, MR of Malta, German Pharma Pool at Munich Re. “A good balance between the risk-taking of cedants and reinsurance risk-taking is key.”

That same balance, Strametz argued, will be crucial in cyber, one of the industry’s greatest growth frontiers. “The protection gap is significantly wider than it is for natural catastrophe insurance,” she said. “Estimates suggest that less than 5%, and possibly as little as 1%, of cyber risks are currently insured.” Despite having grown into a €15 billion global market, cyber insurance still represents less than 1% of global P&C premiums, she added, calling the shortfall “a critical societal responsibility”.

Europe, where penetration lags the US, holds both challenge and opportunity. Strametz said the European cyber market generates around €3 billion in premiums, just 21% of the global total. “Closing this protection gap and strengthening cyber resilience is therefore not just a strategic imperative for the insurance industry,” she said. “It’s a critical societal responsibility.”

To unlock this potential, she argued, the market must “proactively market and actively sell cyber insurance solutions,” simplify products and educate clients on the risks and value of protection. “Delivering risk management services, helping customers monitor threats, understand vulnerabilities and mitigate risk is crucial,” Strametz said.

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