According to Claudia Hasse, Chief Executive Manager at Munich Re, given the accumulation potential the firm sees in cyber re/insurance, it plans to increase cover prices in Germany and Europe.
Hasse, who is responsible for Non-Life business in Germany, Cyber business in Europe and Latin America, and the German Pharmapool, noted in a brief ahead of the Baden-Baden re/insurance meeting that the European cyber market has grown from €400m to €2bn in the last five years, according to Munich Re’s estimates.
She observes, “Our market share depends very much on the individual country in Europe, and ranges between 5% in some countries and over 20% in Germany.”
Cyber in Europe is a profitable business, says Hasse, adding that Munich Re’s combined ratio worldwide is at around 85%.
She notes that in Europe, “It is a notch higher and that is driven by a few large single losses and by the overall lower-rate level compared to, for example, the US.
“For Germany, currently combined ratios are very high, way over 100%, are reported for the market. In our portfolio, we see an increase in losses, but not to the same extent.”
Munich Re adds that there are two reasons for this out-performance. the first being that it chooses its partnerships very consciously, and the second being the firm supports its clients with all of its know-how in pricing, wording, and risk assessment, and it also helps them provide pre-and post-incident services.
Aditionally, Hasse notes in the brief that there are clear limits to the insurability of cyber, adding that Systemic risks like critical infrastructure or war cannot be insured.
She comments, “it’s really important to understand that war is excluded already right now in our wordings.”
Hasse adds, “The goal of the current discussion is to make this exclusion more reflective of particular cyber warfare circumstances for the London market clauses have been developed already with Munich Re participation and those clauses are currently being adapted to the individual European markets, and will then be implemented. This is important to create confidence regarding cyber so that new capital, especially from the capital markets, is ready to come in.”
She notes that given the loss trends and the accumulation potential Munich Re sees in cyber, the firm will increase its technical price in Germany and Europe, concluding, “Overall, we are very confident that our strategy is the right one and we plan to further grow in cyber in Europe.”