Hannover Re E+S expects ‘markedly’ higher reinsurance prices in Germany
Analysts at German reinsurer Hannover Re anticipate prices to go up, especially for catastrophe covers, following this summer's devastating flood losses. Accumulation of large losses from natural perils and the pandemic combined will drag on profitability caused by low interest rates and inflation, and will likely prompt many insurers to further expand their reinsurance coverage.
Hannover Re's German business E+S Rückversicherung expects “markedly” higher reinsurance prices in the aftermath of the summer's historic flood damage, which led to insured market losses well in excess of €8 billion in Germany alone.
Added to this were further hail and heavy rainfall events that also impacted the country in 2021, making it the year with the largest ever burden of insured losses from natural catastrophes in Germany.
“After the terrible severe weather events of June and July, 2021 will go down as one of the costliest years ever for the German market,” said Michael Pickel (pictured), chief executive officer of E+S Rück. “It is our expectation that many insurers will further expand their reinsurance protection in the wake of these latest losses.”
Against the backdrop of these heavy loss losses, E+S Rück considers higher prices in the reinsurance market for commercial and industrial risks to be necessary, especially under loss-impacted programmes. Moreover, it highlights that demand for high-quality reinsurance protection will continue to grow.
Pickel said: “Following on from the considerable strains incurred last year from the Covid-19 pandemic, the recent bad weather losses, low interest rates and price rises in the construction industry will lead to an appreciable increase in reinsurance prices.”
The insurer also noted that protection against cyber risks, progressive digitalisation and increasingly widespread hacker attacks are generating greater risk awareness and prompting adjustments to conditions. “Adjustments are needed for pandemic-related and cyber risks if they have not already been implemented,” it said.
Pickel concluded: “This year, as in the past, we shall work with our customers to find solutions that recognise our entire business relationship, whether it be through traditional reinsurance, tailor-made solutions or the development of innovative coverage concepts. With this in mind, I look to the current renewals with confidence.”
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