Munich Re is expecting to see “further stabilisation and price increases” in the reinsurance market, according to Torsten Jeworrek, a member of the company’s board of management.
Speaking at a briefing during the Reinsurance Rendezvous event in Monte Carlo this week, Jeworrek said that the reinsurance industry had seen “a worldwide stabilisation of rates” in 2019.
Additionally, significant price increases were observed in some regions, particularly in Asia, the Caribbean and the US, which Jeworrek considers to be “a direct reaction and response” to the large catastrophe losses experienced by reinsurers in 2017 and 2018.
“However, that’s not the full story,” he explained. “We also saw for the first time now very good and mentionable rate increases on the primary side. This is a new picture, I would say.”
Munich Re saw these kind of rate increases mainly in the US across many of business, Jeworrek said, as well as in global specialty lines such as marine, aviation and space.
“These global lines suffered individually large losses and these prices now are a consequence of this performance,” he noted.
Looking ahead to the next 12 months, Munich Re is predicting that rate increases will continue broadly across the re/insurance industry as companies collectively push for a return to more profitable pricing conditions.
“The underlying fundamental reason why we saw these price increases was the gap which increased over more than 10 years between price reductions on one hand, and increasing loss trends on the other hand,” Jeworrek said.
“And this gap was partially closed, but it has not been closed yet and therefore my expectation is that we will see a further stabilisation and price increases in reinsurance, and we will also see an ongoing trend on the primary side.”
“This is a better picture than a year ago,” Jeworrek added. “Why is it better? Because it’s easier and healthier if the whole industry desires profitability and not if one party tries for profitability on the back of the other.
“So our expectation is unchanged,” he concluded. “Further firming and increase of rates, particularly in affected segments.”