Munich Re expects rising demand in Europe, but warns on price & term discipline

Global reinsurance giant Munich Re is anticipating continued rising demand for protection across Europe, but at the same time the company cautions on the need to remain disciplined and hold onto gains made in pricing and terms at the renewals.

The reinsurance company said today in Baden Baden that, because of the continued increase in natural catastrophe and weather event frequency and severity, “pricing must reflect underlying risks and incentivise risk mitigation.”

“Munich Re is ready to accommodate growing demand for reinsurance protection underpinned by proper risk-sharing mechanisms. We aim for ever deeper partnerships with our clients and for creating new ones. We put our financial strength and underwriting expertise at their service to enable mutual profitable growth,” explained Clarisse Kopff, Member of the Board of Management at Munich Re.

Demand for property reinsurance protection is expected to continue rising in Europe, with the market expected to remain dynamic, and Munich Re said it stands ready to deploy more capital in response to this rising demand.

However, the reinsurance firm is not ready to support every insurer, saying it is only ready to deploy more of its own capital in Europe where its clients, “demonstrate underwriting discipline in their primary market, with sound exposure management and achieving risk-adequate original rates.”

Highlighting catastrophe and weather loss-cost trends in Europe, Munich Re calls for “a sound pricing system, one that correctly reflects the underlying risks and incentivises risk-reduction measures.”

Looking ahead to discussions with clients in Baden Baden and the end of year renewals, Claudia Strametz, Chief Executive (Non-Life) Germany and Head of Cyber for Europe, said, “We welcome growth but remain insistent that appropriate terms and conditions are built into the original covers as well as reinsurance contracts to ensure a sustainable (re-)insurance market. By leveraging our technical expertise we support our clients in overcoming their challenges. We remain strongly committed to our home market Germany and the other European markets, and continue to be a reliable and predictable partner for our clients.”

Munich Re’s sentiment on the European reinsurance market matches that of competitor Hannover Re’s German entity E+S Ruck.