Against the backdrop of a trend towards more expensive large losses, German reinsurer Hannover Re expects further price increases and improved conditions in property and casualty reinsurance.
The first half of 2022 proved challenging for primary insurers and reinsurers alike. Soaring inflation, major losses and an accumulation of mid-sized frequency losses were as much a factor in property and casualty reinsurance as pandemic-related expenditures were in life and health reinsurance.
When it comes to new investments or reinvesting activities there will be a time delay before higher interest rates have a favourable impact.
Yet all these challenges are dwarfed by the war in Ukraine and the associated human suffering. It is still too soon to make any reasonable estimate of the extent to which this may result in losses for the insurance industry.
For the treaty renewals as at 1 January 2023 Hannover Re expects further price increases and improvements in conditions, not only in loss-affected lines and regions.
Hannover Re sees a number of reasons for rising primary insurance rates including inflation and loss experiences and proportional reinsurance should benefit from that. There is considerably more ground to catch up in non-proportional reinsurance, and corresponding improvements of prices and conditions are therefore needed.