The year 2021 will go down as one of the costliest years on record for the German (re)insurance market after storm Bernd caused unprecedented rainfall and widespread flooding across central Europe in the summer. Swiss Re has predicted that the total insured market-wide loss for the flooding caused by Storm Bernd will reach $12bn.
In a release published in tandem with the Baden-Baden reinsurance conference, E+S Rück said the event would incur insured losses in Germany alone of “well in excess” of EUR8bn ($9.3bn). This loss fell on top of previous severe rainfall and hail events.
CEO Michael Pickel said it was his firm’s expectation that insurers will further expand their reinsurance protection in the wake of these latest losses.
“Following on from the considerable strains incurred last year from the Covid-19 pandemic, the recent bad weather losses, low interest rates and price rises in the construction industry will lead to an appreciable increase in reinsurance prices,” he said.
E+S Rück highlighted natural catastrophe covers as one area which would see “appreciable” price increases after years of benign cat activity.
“What is more, losses and potential losses for programmes connected with Covid-19 could often be priced only minimally into the previous renewals because it was not yet possible to definitively resolve the scale of pandemic losses and the question of coverage under the reinsurance treaties,” it said.
The reinsurer warned pandemic-related strains for some customer relationships have increased further, which means that in these cases additional adjustments will be needed for the reinsurance treaties in the 2022 renewals.
In industrial and commercial business, claims frequency has been on the rise, not only from natural disasters but also man-made events, according to the carrier.
Meanwhile, the reinsurer called for clarification around silent cyber exposure in the class.
“Overall, E+S Rück considers higher prices in the reinsurance market for commercial and industrial risks to be necessary, especially under loss-impacted programmes. On the conditions side, too, adjustments are needed for pandemic-related and cyber risks if they have not already been implemented.”
Meanwhile, in motor reinsurance, results are expected to take a “clear turn for the worse” as flood losses fall on rebounded claims frequency post pandemic. At the same time, the sharp rise in the cost of spare parts and repairs has continued and even accelerated in recent months, E+S Rück said.
“As a consequence, we do not see any room for price cuts in original business or in the reinsurance market,” the carrier said.
CEO Pickel said: "Just as we stood shoulder to shoulder with our customers and their insureds during the pandemic, we continue to do this in the aftermath of this summer's devastating flood disasters.
"This year, as in the past, we shall work with our customers to find solutions that recognise our entire business relationship, whether it be through traditional reinsurance, tailor-made solutions or the development of innovative coverage concepts. With this in mind, I look to the current renewals with confidence."
