Munich Re forecasts “prolonged” reinsurance market hardening

Munich Re forecasts “prolonged” reinsurance market hardening

Today international reinsurer Munich Re said that “prolonged” market hardening is expected in reinsurance, with rate increases forecast for the January 2022 renewals and European agreements viewed as especially important, as significant losses and inflation suggest more prices discipline.Doris Höpke, member of the Board of Management said, “Rising prices for numerous properties and the most recent major losses make substantially greater reinsurance rates in Europe likely. The significant losses produced by extreme flooding in Central Europe and the increase in weather occasions like dry spells and wildfires affect regions that, in some cases, are not characterised by risk-adequate costs and conditions. In addition, the higher inflation is accompanied by continuing low interest rates for financial investments.
” Accordingly, I see a variety of signs for prolonged market hardening when the renewals come.”
Munich Res projection for reinsurance market hardening comes after Hannover Res German subsidiary stated today that market hardening is also expected by it, especially for home catastrophe reinsurance renewals.
After significant losses throughout Germany and Europe from flooding, Munich Re stated that “the impact of environment change … has to be taken into higher account in danger evaluations.”
Rising inflation is also an aspect, with inflation rates expected to remain above pre-pandemic levels, with implications for claims expenses.
These two conditions, climate related catastrophes and inflation, “are producing an upward pressure when it comes to insurance coverage rates,” Munich Re said.
Munich Re continues to drive house its benefit in terms of scale and resources, wanting to go beyond purely providing reinsurance capacity, to provide durability options for perils from natural catastrophe threats, to cyber exposures.
And of course we desire to assist reduce the substantial gaps in insurance that can still be found in many industrialised countries, like insurance for flood losses in Germany. Otherwise, numerous individuals will have no way to cover their losses, or will have to hope they receive state assistance, even though these losses might have been insured in exchange for an ideal premium,” Höpke explained at the Baden-Baden Reinsurance Meeting this early morning.
Höpke said today that “capability is not limited” however she believes that an “increasing risk awareness” and the loss problem, especially in Europe where the market was very soft, suggests that “I dont see any impulse for rates going down.”
She said that the reinsurance market will not harden as was seen twenty years or more back, but rates are so additional and inadequate solidifying on top of the last few years is to be expected.

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