German reinsurer E+S Rück said its home market should see improved rates and conditions next year

E+S Rück, Hannover Re’s home subsidiary for German business, has said it expects a positive premium development for Germany in 2020.

The firm said its assessment is supported by business opportunities in areas such as telematics and legal protection, and above all by improved primary insurance conditions, particularly beneficial for proportional reinsurance.

Premium development in motor insurance is stable; remediation of industrial fire business starting to have an effect; price increases are anticipated for loss-impacted natural catastrophe reinsurance covers; and there is growing German market interest in telematics tariffs.

“Bearing in mind the already strained state of technical profitability and the further decline in interest rates, higher reinsurance prices are essential in many segments”, said Michael Pickel, CEO of E+S Rück.

“Along with loss-impacted natural catastrophe covers, we see a particularly pressing need for further adjustments in the motor and industrial fire insurance lines,” he added.

Attractive opportunities

The German reinsuer anticipated underwriting an expanded book in 2020.

“All in all, E+S Rück anticipates further attractive business opportunities in Germany for 2020 and considers itself well on track to maintain its market share on a high level and selectively expand the portfolio in certain lines,” the company said.

In motor insurance stable average premiums and conditions can be anticipated for the most part under proportional treaties, the German reinsurer said.

This contrasts with higher costs for spare parts and repairs, which will be reflected in a modest strain on profitability.

The low interest rate level should, however, prompt the necessary rate adjustments in non-proportional business, especially in motor third party liability insurance.

Rising risk awareness among reinsurers would likely lead to slight rate increases in the German market for natural catastrophe risks, according to E+S Rück.

European storms such as Eberhard in March and Jörn in June underscore the importance of reinsurance as protection against natural disasters, the reinsurer said.

E+S Rück consequently anticipated growing demand and price adjustments under loss-affected programmes.

On the claims side, too, modest improvements can be discerned, said E+S Rück, especially evident in homeowners’ comprehensive insurance, where natural catastrophe losses are within expectations.

In industrial fire insurance, which has been mostly loss-making in the past, the efforts made by primary insurers to restore business to profitability are starting to have an effect.

Improved reinsurance conditions

In the reinsurance market, too, E+S Rück said it expected improved conditions, with continuing strain on the claims side.

There is still a need for further remediation, the German reinsurer said, including upward pressure on pricing.

In the area of legal protection insurance a significant trend towards stronger demand for reinsurance covers can be discerned for the first time, hence opening up further business opportunities.

This is being driven in particular by accumulation losses such as those that can result from the diesel emissions scandal or from incorrect advice given by financial services providers.

In response to growing demand in the market for telematics tariffs, E+S Rück said it was offering its customers a telematics solution with a proprietary pricing basis under the name es|Tmatik. A pilot project launched in Germany this month includes a corresponding telematics app.