European reinsurers take hardline stance on 1.1 renewals

Munich Re and Hannover Re have both sent a clear message to European cedants that they have no intention of softening their stance at the upcoming 1.1 renewals, with recent loss creep in the region meaning further adjustments to pricing and terms are likely.

This year’s Baden-Baden meeting has seen consistent messaging from reinsurers around loss creep in the region following the significant deterioration of last July's Italian hail event.

During the past 24 hours reinsurers have continued to stress that they will defend the gains achieved in 2022 and 2023 around pricing, wordings and attachment points.

And exposures in loss-affected countries such as Italy and Germany look set for further increases at 1.1 based on current reinsurer sentiment.

Clarisse Kopff, member of the board of management for non-life reinsurance in Europe and Latin America, said Munich Re was “not willing to be challenged” on the reset that took place in 2022 and 2023 on areas such as wordings, price and attachment points.

“It’s important to us that we keep this balance, and it’s also all the more important that, in some cases, we still have further adjustments to conduct,” she said.

Kopff pointed to last July’s Italian hail storms as an example of significant loss creep in the region. “There will be even further adjustments needed in some of the market out there to get to that proper balance of risk sharing between the incumbents along the value chain,” she said.

“We are evolving in a constantly changing risk environment, and the pace of change has accelerated. It’s a constantly changing environment, and it's a constant story of keeping up in expertise, modelling and pricing.

“As reinsurers, we are here to absorb the very large losses. When these losses come every year, it becomes almost business as usual. And when there is an increasing trend of these losses materialising every year, then these should be covered by primary insurers,” she said.

Germany is another European market that has experienced a substantial uptick in catastrophe losses in recent years, with the latest being a €2bn ($2.17bn) flood event in June.

Michael Pickel, CEO of Hannover Re’s German subsidiary E+S Rück, said: “Once again this year, we have already seen devastating floods, following extraordinary severe weather events of previous years with hail and heavy rain, as well as flash floods and winter storms.”

Pickel said the reinsurer was looking for further improvements in pricing as well as terms and conditions following the latest catastrophe losses.

E+S Rück said it also anticipates growing demand overall for natural catastrophe covers at the 1.1 renewals, combined with a sharp increase in purchased capacities.