E+S Rück anticipates further price increases and improved T&Cs at Jan 1

E+S Rückversicherung AG, the Hannover Re subsidiary responsible for German business, has indicated that further price increases and improved terms and conditions are likely at the January 1, 2025, property and casualty reinsurance renewals, following losses caused by severe weather events in the country.

Discussing natural catastrophe covers, E+S Rück observed in a recent report that the claims trend seen in prior years has been sustained.

The firm noted, “Following the hail events of 2023, the claims picture for insurers in the current financial year has been especially notable for multiple flood events.

“All in all, 2024 is again expected to see considerable losses from natural disasters.”

For the coming year, E+S Rück said it expects growing demand overall for natural catastrophe covers, combined with a sharp increase in purchased capacities, while at the same time prices and terms and conditions will show further risk-adjusted improvements.

Michael Pickel, Chief Executive Officer of E+S Rück, commented, “For a number of years now, the insurance industry in Germany has been faced with numerous natural catastrophes causing considerable losses and damage.

“Once again this year, we have already seen devastating floods, following extraordinary severe weather events of previous years with hail and heavy rain, as well as flash floods and winter storms.

“At the same time, motor insurance remains in deficit for structural reasons. We are also concerned about increased loss advices from our clients for prior-year claims. As a reliable partner for our clients, we always offer them the best possible reinsurance capacities and support them actively in managing claims. Adequate prices, terms and conditions are absolutely essential for this.”

Adding more to the motor insurance topic, the firm said, “The tariff adjustments made by primary insurers have so far failed to achieve the desired effect owing to persistently high claims inflation.

“Sharp increases in the costs of repairs and spare parts have led to a further rise overall in claims expenditure for physical damage. Higher costs can be observed in connection with major bodily injury claims due to increased care expenses.”

Michael Pickel continued, “Claims frequency is not diminishing, while the increase in spare parts and workshop costs is well above inflation. This is taking a heavy toll on the results posted by motor insurers.

“Over the coming years, primary insurers will have no alternative other than to make further significant price increases in motor insurance. This is the only way they can move out of the loss-making zone and restore motor business to a profitable footing for the long term.”

Meanwhile, the market for cyber covers had reportedly already levelled off in 2023 due to softening prices and increased competition.

“At the same time, there is pressure to make adjustments as losses caused by cyber-attacks are rising. The aggregation risk is also taking on added relevance. Reflecting the advance of digitalisation, cyber insurance is a growing line of business that requires the appropriate expertise,” E+S Rück concluded.

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