Hannover Re expects catastrophe reinsurance prices to rise
Commenting on the outlook for the January 2024 reinsurance renewals, German reinsurer Hannover Re said this morning that further price increases are expected for natural catastrophe risks in its home country.
E+S Rückversicherung AG (E+S Rück), the Hannover Re subsidiary that writes the group’s German reinsurance business, “expects further price increases and improved conditions in the 1 January 2024 renewals in property and casualty reinsurance,” the company said this morning.
Citing continued high natural disaster and weather losses, as well as high inflation, the company says the German insurance industry has suffered again this year, exacerbated by the ongoing rise in reconstruction and repair costs, the upshot is an adverse impact to the insurance sector’s profitability in the country.
“We must assume that the multi-year trend towards higher claim payments will continue. Adequate prices are indispensable if we are to be able to offer our clients the best possible reinsurance capacity in the future, as we have in the past,” explained Dr. Michael Pickel, Chief Executive Officer of E+S Rück, speaking around this year’s Baden-Baden reinsurance meeting. “Particularly at a time of many different interrelated challenges, it is therefore vital for us as a reinsurer to tackle these issues and design solutions jointly with our partners. Moving forward, then, we shall continue to stand by our clients as their partner in managing losses caused by climate change and natural catastrophe risks – just as E+S Rück has done for 100 years.”
Just like around the rest of the world, the German insurance industry has been affected by extreme weather throughout this year, and while the first-half was a little below-average, a series of storms centred on southern Germany in August boosted losses considerably.
As a result, Hannover Re’s E+S Rück expects 2023 will “see substantial losses overall from catastrophe covers.”
Claims expenditures are expected to keep rising as well, as natural peril covers are increasingly taken up, while sustained inflation exacerbates the quantum of losses suffered, all while reinsurance capacity remains “tight overall”, the reinsurer believes.
“All in all, then, prices for catastrophe covers look set to increase further,” the company said this morning.
Which means “further modifications to risk-adjusted prices and conditions” at the upcoming renewal season, Hannover Re believes.
“Despite the challenging market environment, I am confident about the upcoming renewal round, because our customer relationships and thus also the upcoming negotiations are always characterized by a cooperative partnership with all market participants,” added Dr. Michael Pickel.
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