Hannover Re, the world’s third largest reinsurer, said it expects higher rates for insurance and reinsurance in Germany following this year’s flooding and hailstorms, which led to the most costly claims in 30 years.
“In view of the considerable losses caused by the three hailstorms and the flooding, prices for covers in the hard hit motor own damage and homeowners’ lines are set to rise further in 2014 on the primary insurance side,” Michael Pickel, management board member responsible for the country, told reporters in Baden-Baden, Germany. “Adjustments for loss-impacted reinsurance programs are expected to go hand-in- hand with greater demand for reinsurance protection.”
Hannover Re, led by Chief Executive Officer Ulrich Wallin, said on Sept. 9 that it expects global reinsurance rates to remain little changed when contracts are renewed in January. Insured losses from floods and hailstorms in Germany may be as high as €5 billion [$6.875 billion], the company said.
Hailstorm Andreas, which hit parts of Germany at the end of July, is expected to cost the insurance industry €2.5 billion [$3.4375 billion], while a June hailstorm named Manni may cost €500 million [$687.5 million] and another that struck in August €200 million [$275 million], Hannover Re said. The reinsurer said it expects industry losses of €1.8 billion [$2.475 billion] from the floods in May and June.
Homeowner insurance claims from the recent hailstorms have become more expensive due to the increased use of thermal insulation materials, Pickel said. The company expects a combined ratio, or claims and costs as a percentage of premiums, of 133 percent this year for the business after 104 percent last year following the flooding and hailstorms.
Hannover Re said on Oct. 17 that hailstorm Andreas, which hit Germany in July, may result in a “disproportionately slight” net loss of about €65 million [app. $90 million].
Reinsurers, including Munich Re and Hannover Re, are meeting this week in Baden-Baden with brokers and primary insurers — for which they help shoulder risks for clients in return for a share of premiums — to renegotiate terms and conditions of contracts due for renewal in January. The talks follow a meeting in Monte Carlo in September.
Munich Re, the world’s biggest reinsurer, said earlier today that rates in Germany need to rise following this year’s floods and hailstorms, which produced industry claims of $8 billion in Europe in the first nine months of the year. That compared with the 10-year average for claims of $6 billion, the company said.
Editors: Dylan Griffiths, Keith Campbell.