Moody’s Investors Service has changed its outlook on Dutch property & casualty (P&C) insurers to stable from negative as rising premiums help offset claims inflation.
The rating agency has also revised the outlook of Dutch life insurers to stable as interest rates rise.
Analysts believe that rising interest rates are positive for both P&C and life insurers and as they will reduce pressure on investment returns that account for the bulk of Dutch life insurers’ earnings.
They added that insurers have also made significant efforts to reduce their costs, though further costs will still be required to offset depressed business volumes.
“We expect P&C insurers to raise their prices relatively promptly in response to accelerating claims inflation and their relatively high catastrophe risk exposure,” said Louis Nonchez, an AVP and analyst at Moody’s. “This, coupled with an economic recovery, should sustain premium growth.”
Nonetheless, Moody’s does see the the Dutch life insurance market as continuing to stagnate, reflecting still depressed sales of individual life products despite opportunities arising from the coming pension reform, and the run-off of legacy business, forcing insurers to trim their cost base.
Looking ahead, it’s expected that the crisis in Ukraine could temper the economic recovery in the Netherlands and limit insurance growth in the country, despite the negative impact of COVID-19 have been relatively mild when compared with other European countries.
Natural catastrophes could also pose a potential headwind to insurers, as the Netherlands is the most vulnerable country in Europe to these kinds of events, due to its propensity for flooding and the threat of rising sea levels.
