michael-pickel_hannover-re-jpg
Michael Pickel, Hannover Re executive board member
24 October 2018 Insurance

E+S Rück anticipates higher premiums in Germany

E+S Rückversicherung, a subsidiary of Hannover Re which writes German reinsurance business, said it expects positive premium development in the German market for the upcoming round of treaty renewals at January 1, 2019, albeit at a somewhat more muted pace than in the previous year.

“Against the backdrop of an increased number of small and mid-sized losses we do not see any room for concessions,” said Michael Pickel, a member of the company’s executive board, during a press conference in Baden-Baden.

“Adjustments are necessary under certain treaties, for example after reserve increases. For this reason, we expect slightly higher reinsurance rates for the treaty renewals at January 1.”

Growing competition in motor primary insurance means that deteriorating results and a corresponding need for adjustments on the reinsurance side must be expected, the company said. In motor reinsurance E+S Rück expects stable conditions for proportional treaties and rate increases in the mid-single digit percentage range for non-proportional covers.

When it comes to natural catastrophe covers E+S Rück similarly expects a modest rate increase due to higher losses and at least stable rates under programmes that were not impacted. Winter storm Friederike and several heavy rainfall events are unlikely to push rates higher across the board, however, because in many instances the resulting losses remained within the retention run by primary insurers, the company said.

Bearing in mind the increased prevalence of natural disasters in recent years, ceding companies will probably continue to review their reinsurance requirements, and E+S Rück therefore expects stronger demand for catastrophe covers.

Homeowners’ comprehensive insurance, on the other hand, is still in need of remediation because past results—even in years without significant natural perils events—were not satisfactory market-wide, E+S Rück said.

In this sector, the reinsurer said, in 2018 the market will likely post another underwriting loss, despite the rate increases that have already been implemented. The same is true of industrial fire insurance, which is once again in deficit. Premium increases were scarcely observed at primary insurers, despite substantial losses in the current year, it said.

Finally, the sustained interest in cyber insurance in Germany, especially for smaller and mid-sized enterprises, is likely to generate additional premium income. Clash covers, in particular, are enjoying a surge in demand among customers.

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