The reinsurers arrive in Monaco for their annual industry gathering, strengthened.
EOnce a year, at the beginning of September, the reinsurers and their clients, the primary insurers, travel to Monte-Carlo. Discussions take place for four days. Even the weather is a topic of conversation, although the forecast is clear: the sun is expected to shine, with maximum temperatures reaching 27 degrees, which is still typical for the Riviera in early September.
What is already common this summer? Hardly a day passed without a report of an extreme weather event. Whether it be the wildfires in California, Hawaii, and Canada or the fires in Europe, especially in Greece.
Hinzu kamen zerstörerische und teilweise tödliche Überschwemmungen in Slowenien und Teilen Österreichs und zuletzt in Spanien. Und auch Deutschland blieb nicht verschont. Die Schäden durch den Hagelschlag in Bayern im August sind noch in Erinnerung.
The expenses are skyrocketing.
The costs of repairing damages caused by natural disasters are becoming increasingly expensive. Even in the first half of the year, the damages caused by earthquakes, storms, or floods were significantly higher than the average of the past ten years. This was revealed by an analysis conducted by Munich Re, the world’s largest reinsurance company.
According to the report, the damages caused by earthquakes, storms, and floods from January to June amounted to 110 billion dollars. This is 10 billion dollars less than the previous year’s period, but still higher than the inflation-adjusted average damage of the past ten years, which was calculated to be 98 billion dollars.
„I cannot reword“
Geteilter Appetit auf Wetter-Risiko
Not everyone wants to face the challenge anymore. „The US reinsurer Axis Capital no longer underwrites natural disasters,“ said Johannes Bender, senior analyst for insurers at the rating agency Standard & Poor’s (S&P), in a media briefing. Instead, Axis focuses more on liability underwriting.
A business, which, as Bender describes, is once again suspicious to Swiss Re. The reason is the increasing amount of damage awards by US courts. This is a development that Munich Re CEO Joachim Wenning also publicly criticized when presenting the half-year figures a few weeks ago. For their climate expert Rauch, it is clear: „We need diversification over time, geographical regions, and risk segments to mitigate peak risks such as hurricanes in Florida.“ The climate expert also expects the demand for coverage of weather events to increase.
The premiums continue to remain high.
There is consensus, however, that the premiums will continue to remain high. The reinsurance companies are likely to remain in a hard market, where the demand for reinsurance services is higher than the supply, for quite some time.
Dirk Schmelzer, who has been the head portfolio manager at Plenum Investments since 2010 and is knowledgeable about the insurance industry, believes that all market participants have an interest in keeping premiums high. He believes that premiums should increase by more than 5 percent in the upcoming renewal period, which was the average increase at the start of the year. However, he does not want to provide an exact figure.
Das bedeutet für die Rückversicherer, dass die guten Margen, die in diesem Jahr erreicht worden sind, im kommenden Jahr noch verteidigt werden können. S&P sieht für die zwanzig größten Rückversicherer der Welt eine Netto-Schaden-Kosten-Quote zwischen 92 und 96 Prozent, also ein profitables Geschäft. Erst wenn die Quote über 100 Prozent liegt, wird es für die Versicherer ein Zuschussgeschäft.
The reinsurers earn their cost of capital. S&P expects the return on equity to be 9 to 12 percent in this and the following year, which is significantly higher than in previous years.