E+S Rückversicherung AG (E+S Rück), a subsidiary of Hannover Re responsible for the group’s German business, expects further price increases and improved terms in the property and casualty reinsurance market during the Jan. 1, 2025, renewals.
The company cited the impact of numerous natural catastrophes in recent years, which have caused significant losses in Germany. Floods in 2024 followed previous severe weather events involving hail, heavy rain, flash floods, and winter storms. Additionally, motor insurance remains in deficit due to structural issues, and there has been an increase in loss notifications for prior-year claims.
Michael Pickel (pictured above), CEO of E+S Rück, emphasized the importance of maintaining adequate prices, terms, and conditions to continue offering clients reinsurance capacities and support in claims management.
“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,” he said.
E+S Rück predicts that motor insurance, the largest line of property and casualty insurance by volume, will likely stay in deficit. Primary insurers’ efforts to adjust tariffs have not been sufficient to counteract high claims inflation.
Rising repair and spare parts costs have contributed to increased claims expenditure for physical damage. Additionally, higher costs have been observed in major bodily injury claims due to increased care expenses.
Pickel noted that claims frequency has not decreased, while the costs of spare parts and workshop services are rising above inflation levels.
"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,” Pickel said.
E+S Rück also noted a stronger need for price adjustments in non-proportional covers with lower retentions and proportional reinsurance treaties. Natural catastrophe claims trends have continued, with multiple flood events and hail damage in 2023 contributing to significant losses.
The company anticipates growing demand for natural catastrophe coverage in 2025, with an increase in purchased capacities and further improvements in prices and terms.
The industrial and commercial property insurance markets have reported continued poor results, driven by an increased frequency of large fire losses in 2023. Although inflation has normalized, the market still requires adjustments.
Emerging risks, such as SRCC (strikes, riots, civil commotion) and the insurability of forever chemicals (PFAS), are becoming more significant in the liability line.
In the cyber insurance market, conditions stabilized in 2023 due to softening prices and increased competition. However, losses from cyber-attacks are rising, and the aggregation risk is gaining more attention. Cyber insurance is a growing line of business that requires specialized expertise, particularly as digitalization advances.
Thorsten Steinmann, a member of the E+S Rück executive board who will assume the role of CEO on Jan. 1, 2025, stressed the importance of maintaining reliability and continuity in the company’s relationships with clients.
"Going forward, as in the past, we see a wide range of opportunities to profitably grow our business together with our clients. I am convinced that we will achieve this by building on our proven strengths and continuing to evolve,” Steinmann said.
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