E+S Rück believes that further price increases are unavoidable due to high inflation and the burden of major losses
EQS-News: Hannover Rück SE / Key word(s): Miscellaneous
E+S Rück believes that further price increases are unavoidable due to high inflation and the burden of major losses
24.10.2022 / 07:30 CET/CEST
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company report
E+S Rück considers further price increases due to high inflation and Major loss burden for unavoidable
- significantly higher average claims burden in motor insurance; Damage frequency largely normalized
- Natural catastrophe losses will again weigh heavily on the insurance industry in 2022
- Increased risk awareness leads to persistently high demand for cyber cover at increased prices
- Further significant adjustments to risk-adjusted prices and conditions are necessary
Hanover, 24 October 2022: E+S Rückversicherung AG, the subsidiary of Hannover Re responsible for German business, expects significant increases in risk-adjusted prices and conditions in non-life reinsurance due to the persistently high claims burden and the sharp rise in inflation.
“Both primary insurers and reinsurers have seen a significant rise in inflation rates, which, together with persistently high burdens from major losses, is having a negative impact on the profitability of the entire industry,” said Dr. Michael Pickel, CEO of E+S Rück. “While images of last year’s devastating floods are still fresh in our minds, winter storms, droughts and wildfires this year show that natural disasters are on the rise in Europe. All of this necessitates further price increases in both primary insurance and reinsurance.”
The winter storms such as “Ylenia” and “Zeynep” and other storms ensure that the insured losses in the first half of 2022 in Germany alone are above the long-term average. In other regions of Europe, insurers also had to cope with high losses, for example from hailstorms in France in June.
Overall, E+S Rück is anticipating significant price and condition adjustments in the property line in Germany against the background of repeated high claims expenditure – even beyond pure natural catastrophe covers. In addition, the demand for high-quality reinsurance protection such as that offered by E+S Rück is maintaining a uniform.
In the motor insurance claims frequency has continued to normalize and has come back towards the long-term trend, albeit at a lower level than before the pandemic. At the same time, inflation and delivery bottlenecks are accelerating the trend towards ever higher spare parts and repair costs. It is therefore to be expected that the results in the motor line of business will continue to cloud over emotionally if the primary insurers do not react with correspondingly significant price increases.
at Natural Catastrophe Covers considerable burdens due to storms have again been recorded in the current year. According to the German Insurance Association, the winter storms “Ylenia”, “Zeynep” and “Antonia”, which hit large parts of Germany and Northwest and Central Europe at the beginning of the year, caused market damage of around EUR 1.4 billion. The year 2022 was one of the three most severe winter storm events since 2002.
The high rates of inflation are making the claims burden even more expensive, while after the severe flooding of the previous year, increased demand for natural hazard covers has increased the exposure on the part of primary insurers. At the same time, capacities in the reinsurance market are declining overall. Overall, prices for natural catastrophe covers should therefore rise significantly.
I am industrial and commercial business the pressure to rehabilitate continues. At the same time, bottlenecks in the supply chains and a gloomy economic outlook due to high inflation are weighing on the company. In the area of business interruption, extended repair and reconstruction times should be reflected accordingly in adjusted scopes of cover and conditions.
at Cyber Covers progressive digitization and ongoing growth in combination with increasing damage from cyber attacks lead to increased risk awareness. If you primary insurers have reduced their limits, which negatively affects the available capacity. All of this translates into further significant improvements in prices and conditions, both on the part of insurers and reinsurers.
“While further adjustments to prices and conditions in primary insurance and reinsurance are unavoidable, we at E+S Rück will continue to rely on partnership-based negotiations with all market participants and long-term customer relationships,” said Dr. Michael Pickel. “We can only meet the current and future challenges together. I am optimistic that we will succeed in the coming renewal.”
die Hannover Re is the third largest reinsurer in the world with a gross premium volume of more than EUR 27 billion. It operates all lines of non-life and life and health reinsurance and is represented on all continents with more than 3,000 employees and associates. Founded in 1966, the Hannover Re Group today comprises more than 170 subsidiaries, branches and representative offices worldwide. The German business is operated by the subsidiary E+S Rück. The rating agencies for the insurance industry have awarded both Hannover Re and E+S Rück very good financial strength ratings: Standard & Poor’s AA- “Very Strong” and AM Best A+ “Superior”.
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