Munich Re anticipates hardening in Europe

18-10-2021

Munich Re anticipates hardening in Europe

Doris Höpke, board member, Munich Re

Reinsurers with a European footprint can expect rising prices in the January renewals, according to Munich Re. 

The world’s largest reinsurer’s management board member Doris Höpke said signs pointed to “prolonged market hardening”.

“Rising prices for various assets and the latest major losses make considerably higher reinsurance rates in Europe likely. The major losses produced by extreme flooding in Central Europe and the rise in weather events like droughts and wildfires affect regions that, in some cases, are not characterised by risk-adequate prices and conditions,” she said. 

“In addition, the higher inflation is accompanied by continuing low interest rates for investments. Accordingly, I see a number of indicators for prolonged market hardening when the renewals come.”

The prediction follows losses from the mid-July flooding that Munich Ret estimates at  €46bn, of which over €9bn were insured. For Germany, with overall losses of around €33bn and insured losses of at least €7bn, the flooding was the most expensive natural catastrophe in history. 

“In addition to improved preventive measures, the influence of climate change, which makes precisely this type of regional extreme rainfall more probable, has to be taken into greater account in risk assessments,” said Munich Re.

According to the business, natural catastrophe risks, COVID-19, and increasing cyber attacks are seeing the role of reinsurance increasingly “transcending risk transfer”.

It said: “The latest very large losses, including those in Europe, show that the role of insurance must extend far beyond assuming risks and compensating for losses. Consulting based on sound risk expertise can promote more active prevention, helping to prevent or reduce losses.”

Speaking at the reinsurer’s Baden-Baden meeting, Höpke concluded: “The basis for insurance, and for risk management of any type, is to monitor and understand risks and to subsequently develop forward-thinking solutions that can strengthen society in the long term. And, of course, we want to help reduce the considerable gaps in insurance that can still be found in many industrialised countries, like insurance for flood losses in Germany. Otherwise, many people will have no way to cover their losses, or will have to hope they receive state support, even though these losses could have been insured in exchange for a suitable premium.”

Losses, Munich, Europe, Risk, Reinsurers, Insurance, Floods, Catastrophe, Germany, Assets, Investments, Munich Re, Doris Höpke, COVID-19, Cyber attacks

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