E+S Rück, the Hannover Re subsidiary responsible for German property and casualty reinsurance, has published its view of the upcoming German renewals. In its press release, the company states that the underlying risks continue to increase despite moderate catastrophe loss expenditure in recent years, and that competition is intensifying in certain market segments.
The risk backdrop as E+S Rück describes it
Thorsten Steinmann, CEO of E+S Rück, said: “The moderate catastrophe losses of the past few years should not obscure what remains a demanding and highly uncertain risk landscape.” He added: “Natural perils, inflation, cyber risks and geopolitical instabilities are adding to the potential for losses and confronting insurers and reinsurers alike with increasingly complex challenges.”
On costs, E+S Rück states in its release: “Inflation and costs continue to rise, most strikingly in property and casualty insurance.”
InsuraBeat has separate coverage of Hannover Re’s earlier comments on P&C renewal pricing.
Client buying behaviour and the underwriting stance
On the demand side, Steinmann said that, in his view, many primary insurers have significantly strengthened their earnings and capital position.
“Some clients are using their improved earnings position to deploy reinsurance selectively,” said Steinmann.
On underwriting, the CEO of E+S Rück said:
“With certain segments becoming increasingly competitive, we continue to view a disciplined underwriting policy as well as risk-adequate prices and conditions as essential for ensuring the long-term availability and viability of reinsurance protection.”
Thorsten Steinmann, CEO of E+S Rück
Steinmann also said: “It is particularly in this environment that reinsurance remains a key tool for reducing volatility, enabling growth and securing financial stability.”
Motor: broad stabilisation, a trend E+S Rück calls fragile
According to E+S Rück, German motor insurance, the largest line of property and casualty insurance by volume, has broadly stabilised. The company adds that the tariff adjustments made in recent years are having an effect.
On results, the company states: “Technical results have moved marginally back into positive territory and profitability is improving appreciably.” In E+S Rück’s view, however, the trend remains fragile.
On claims costs, E+S Rück states: “Costs for spare parts and repairs continue to clearly outpace the general rate of inflation and therefore remain the most significant drivers of claims inflation in the motor market.”
Natural catastrophe: programme pricing and added capacity
In natural catastrophe business, E+S Rück has observed that many customers’ programmes are now adequately priced to reflect the risks. The company states that, at the same time, additional capacity is leading to more intense competition and adding to the pressure on prices and conditions.
On hail, E+S Rück states in its release that the recent increased expenditures caused by hail events in Switzerland, southern Germany, northern Italy and the neighbouring Alpine regions show that the underlying risks remain high.
InsuraBeat has separate coverage of Munich Re’s release on rising risks.
Industrial and commercial lines: added capacity and pressure on terms
For industrial and commercial lines, E+S Rück states that following good results of late, additional capacities – most notably in industrial fire business – are leading to more intense competition. From the perspective of E+S Rück, prices and conditions in some segments of industrial insurance are consequently coming under pressure.
Marine and aviation: treaty conditions holding stable
According to E+S Rück, the specialty lines of marine and aviation are feeling the effects of geopolitical uncertainties, the claims experience globally and an excess supply of capacity. Based on E+S Rück’s observations, treaty conditions are holding stable.
Cyber and insurance-linked securities
On cyber, the company states: “In cyber insurance, economic dependence on digital infrastructure and IT systems is currently growing faster than the capacities made available to cover such risks.”
On insurance-linked securities, E+S Rück states in the same release: “Insurance-linked securities (ILS) complement traditional reinsurance by providing additional capital market capacity.” In cooperation with Hannover Re, E+S Rück offers its clients access to ILS solutions.
