Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re, said:
"Our business model and our capital resources are geared to managing extreme scenarios. Low interest rates are here to stay for a long time. This necessitates considerable pricing discipline, because technical profitability will have to do even more to offset declines in investment income. With this in mind, price increases on both the insurance and reinsurance side are absolutely essential in January and beyond."
The effects of the Covid-19 pandemic on worldwide reinsurance markets vary in scale from region to region. The largest losses to date are anticipated from covers in the areas of business interruption, trade credit and event cancellation, although the spectrum of possible scenarios remains too broad for concrete forecasts.
A further consideration is that many government assistance programmes are limited in duration. Against this backdrop, the level of risk awareness among primary insurers and hence the importance attached to high-quality risk protection have risen sharply over the past few months.
In the markets of Central and Eastern Europe the Covid-19 pandemic has, as in many other regions, had an added adverse impact on what was already a challenging economic situation, even though no or only minimal Covid-19-related losses are to be expected from this region. Price increases can be anticipated under loss-affected treaties and for programmes that were not adequately priced to reflect the risks. Over the medium to long term Hannover Re is looking for the economy here to bounce back and for stronger growth rates in primary business so as to close the protection gap.