German severe weather losses to drive price and T&C improvements at 1.1: E+S Rück

Severe weather losses in Germany mean that further price increases and improvements to terms and conditions are expected at the 1 January 2025 renewals, according to Hannover Re subsidiary E+S Rück.

Multiple notable flood events – including the €2bn ($2.17bn) event in June – mean that 2024 is expected to again see a substantial natural disaster bill for German carriers.

E+S Rück said that growing demand for nat cat covers will materialise in the coming year alongside a sharp increase in purchased capacities. It predicted that both prices and terms and conditions will show further risk-adjusted improvements.

Motor insurance, the German market’s largest P&C line by volume, will remain in a deficit, E+S Rück said.

Tariff adjustments made by primary insurers have failed to achieve their desired effect given persistently high claims inflation driven by higher costs for repairs and spare parts alongside increased expenses for major bodily injury claims.

E+S Rück CEO Michael Pickel said: "Over the coming years, primary insurers will have no alternative other than to make further significant price increases in motor insurance. This is the only way they can move out of the loss-making zone and restore motor business to a profitable footing for the long term."

The need for adjustments to prices, terms and conditions is more marked for non-proportional covers with lower retentions alongside proportional reinsurance treaties, said the Hannover Re subsidiary.

Industrial and commercial business has continued to report poor market numbers in property insurance during 2024 following the increased frequency of large fire losses in the prior year.

And the Hannover Re subsidiary said the German market is also looking towards new exposures.

These include the growing impact of strikes, riots and civil commotion, the potential insurability of forever chemicals in liability lines, and cyber.

Rising losses from cyber attacks mean there is pressure to make adjustments after competition and softening prices saw the market level off in 2023, E+S Rück said.