Munich Re demands higher prices in negotiations | news
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MUNICH (Reuters) – The world’s largest reinsurer Munich Re is pushing for higher prices ahead of the annual industry meeting in Baden-Baden.
Munich Re explained that the environment for insurers and reinsurers is “more complicated than ever before in view of rising inflation, the threat of recession, increasing numbers of natural catastrophes and cyber attacks.” “The outlook is pretty bleak,” said Thomas Blunck, the board member responsible for European business, on Thursday in Munich. In the negotiations with European customers, which begin in Baden-Baden, this must be “adequately reflected in the prices,” said Blunck. How high they turned out depends on each individual primary insurer, from which Munich Re takes some of the risks.
The prices for reinsurance protection have been rising for several years. A growth target has not been set for the contract renewals at the turn of the year 2023, said Blunck. Germany boss Claudia Haase said she assumes that primary insurers will increase deductibles, i.e. keep more risks on their own books, in order to partially absorb the price increases.
Hurricane Ian, which swept through Florida and the southeastern United States at the end of September, placed a heavy burden on reinsurers. Swiss Re, Munich Re’s biggest competitor, has to vouch for this with 1.3 billion dollars. The group had to withdraw its return forecast for the current year. Munich Re has not yet given a loss estimate.
However, the billions in damage in Florida should also affect European business because there is less reinsurance capital available in the market, said Blunck. At the same time, additional capacity of 2.5 billion euros is needed in Germany alone after the flood disaster with the low “Bernd” in the west in summer 2021, said Haase. “‘Bernd’ was clearly a wake-up call for the industry.” However, Munich Re did not have to adjust its claims models.
The reinsurer is also concerned about the situation in motor insurance and fire insurance in the industrial segment. Losses are to be expected in both areas this year because damage has increased sharply. There is even “hyper-inflation” for spare parts for cars, said Haase. In these areas, “strong price discipline and consistent risk management are required”.
In its own estimation, Munich Re is doing better than the industry in cyber insurance, where the premium volume has quintupled over the past five years. According to Haase, the reinsurer has a 20 percent market share in Germany and between five and 20 percent in the rest of Europe. With a combined ratio of 85 percent worldwide – in Europe “a bit worse” due to some major claims – Munich Re is profitable, while the industry association GDV sees the industry in the red. The premiums are likely to continue to rise, said Haase.
(Report by Alexander Hübner, edited by Hans Seidenstücker. If you have any questions, please contact our editorial team at email@example.com (for politics and the economy) or firstname.lastname@example.org (for companies and markets).)
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