Along with the sometimes above-average large losses recorded in past years, the recent flooding seen in Europe – a natural disaster on a historic scale – and the considerable losses caused by Hurricane Ida in the US have further increased the need for action on the part of reinsurers. Pandemic-related costs and the low interest rate environment are an additional strain on the results generated by primary insurers and reinsurers. Inflation rates have also been rising of late in some regions. This has further heightened risk awareness among primary insurers and given an added boost to demand for high-quality reinsurance protection.
"In property and casualty reinsurance there is a need for further rate increases. Only in this way will reinsurers be able to provide reliable risk protection in an increasingly challenging environment," said Jean-Jacques Henchoz, CEO of Hannover Re. "Particularly where natural catastrophe risks are concerned, adjustments are unavoidable. While the pace of price increases has slowed somewhat of late in the renewals during the year, this was primarily the case in areas where substantial increases had already been recorded in prior years."
Backdrop of multi-layered challenges for reinsurers
In the previous rounds of renewals throughout 2021, Hannover Re has been able to secure improved conditions and higher prices; nevertheless, further adjustments are needed against the backdrop of the multi-layered challenges posed by large losses, pandemic expenditures, and the low interest rate level as well as the increasingly intense pressure on margins.
Profitability in proportional reinsurance is satisfactory in light of sometimes marked price increases in the original market. In non-proportional reinsurance the available capacities continue to be adequate. Rates are holding steady or moving slightly higher worldwide.
"In addition to our customer-centricity focused on long-term partnerships, we offer a broad range of products and tailored solutions that encourage our clients to grow with us worldwide and across multiple lines of business," said Sven Althoff, Member of Hannover Re's Executive Board with responsibility for property and casualty reinsurance. "In the current year and beyond this will be reflected in further profitable growth in the gross premium booked in property and casualty reinsurance."