Branch
Reinsurers expect prices to rise after the flood disaster
The center of Rech in the Ahr Valley is largely destroyed three months after the flood disaster in July. Photo: Boris Roessler / dpa
© dpa-infocom GmbH
The insured damage from the flood disaster in summer is high. This also has consequences for reinsurers. E + S Rück sees 2021 as “one of the most damaging years on the German market”.
The two large German reinsurers expect prices to rise in their industry.
Both Munich Re and Hannover Re blamed the summer flood on Monday, which wreaked havoc in Germany and several neighboring countries. According to both companies, another factor is the rise in the inflation rate. Soaring prices for building materials should also make the reconstruction of destroyed houses in the floodplains in Rhineland-Palatinate and North Rhine-Westphalia more expensive.
“The rising prices of many assets and the recent major losses speak for noticeably rising reinsurance rates in Europe,” said Munich Re board member Doris Höpke. She believes that premium increases are particularly necessary in regions where natural disasters have caused serious damage for the first time in a long time.
The reinsurance industry usually meets with its customers in Baden-Baden in October – primary insurers such as Allianz and Axa. There both sides talk about the conditions for the following year. Because of the pandemic, the consultations will largely take place online, as in 2020.
Noticeable price increase
“After the terrible storms in June and July, the year 2021 will be one of the most damaging years in the German market,” said the head of the German Hannover Re subsidiary E + S Rück, Michael Pickel. After the damage caused by the pandemic, the recent storm damage, low interest rates and rising prices in the construction industry required a noticeable increase in reinsurance prices.
Hannover Re expects that the flood disaster in July caused insured losses of well over eight billion euros in Germany alone. Munich Re continues to assume at least seven billion. However, only a fraction of the actual damage is insured. Munich Re estimates the total damage in Europe at EUR 46 billion, of which EUR 33 billion in Germany.
Broker Aon doubts
While the reinsurers insist on significant premium increases, the broker Aon reports doubts. Comments on general price increases or price reductions are “inappropriate and largely worthless,” said Aon Germany boss Jan-Oliver Thofern in a video statement. Because reinsurance is a global business. And despite serious natural disasters such as low “Bernd” in Europe and hurricane “Ida” and winter storm “Uri” in the USA, the year 2021 is not one of the record loss years from a global perspective.
In addition, the capital of the reinsurance industry rose to a record level in the middle of the year, argues Thofern. Therefore, in his opinion, an increasing demand for reinsurance protection should meet sufficient capacity.
Meanwhile, Munich Re manager Höpke called for greater risk awareness in politics and the population: “Crisis management must not be neglected, even if there have been no such disasters for years.” The state must invest in protective infrastructure in order to limit the damage caused by future disasters and to protect human lives. In other countries, measures have been shown to reduce property damage and death.