"After the terrible severe weather events of June and July, 2021 will go down as one of the costliest years ever for the German market," said Dr. Michael Pickel, Chief Executive Officer of E+S Ruck.
The disastrous flooding caused by the low-pressure system "Bernd" led to insured market losses in Germany alone well in excess of EUR 8 billion. Added to this were further hail and heavy rainfall events, as a consequence of which 2021 will likely be the year with the largest ever burden of insured losses from natural catastrophes in Germany.
All in all, against the backdrop of the heavy loss expenditures, E+S Ruck anticipates appreciable adjustments to prices and conditions in the property line in Germany, especially for catastrophe covers. Moreover, demand for high-quality reinsurance protection continues to grow.
Claims frequencies in motor insurance will come close to reaching the pre-pandemic level again in 2022. At the same time, the sharp rise in the cost of spare parts and repairs has continued and even accelerated in recent months. Taking into account regional hail and flood losses that were in some cases significant, results for the industry are expected to take a clear turn for the worse compared to the previous year. "As a consequence, we do not see any room for price cuts in original business or in the reinsurance market", as the reinsurer' representatives pointed out in a statement.
Natural catastrophe covers in Germany will see appreciable price increases in the aftermath of the summer's historic flood damage. After years with comparatively low claims burdens from natural hazards, the year 2021 was one of the most damaging ever. What is more, losses and potential losses for programs connected with Covid-19 could often be priced only minimally into the previous renewals because it was not yet possible to definitively resolve the scale of pandemic losses and the question of coverage under the reinsurance treaties. The pandemic-related strains for some customer relationships have increased further, which means that in these cases additional adjustments will be needed for the reinsurance treaties in the 2022 renewals.
Large losses in industrial and commercial business have similarly increased year-on-year, due not only to the rise in losses from natural catastrophes but also to human-caused losses. Particularly in industrial fire business, a high claims frequency has also been recorded. "The pressure for remediation therefore remains undiminished. When it comes to protection against cyber risks, progressive digitalization and increasingly widespread hacker attacks are generating greater risk awareness and prompting adjustments to conditions. There is a need for clarification as regards the handling of silent cyber risks and accumulation scenarios that can only be insured to a limited extent".
Overall, E+S Ruck considers higher prices in the reinsurance market for commercial and industrial risks to be necessary, especially under loss-impacted programs. "On the conditions side, too, adjustments are needed for pandemic-related and cyber risks if they have not already been implemented".