While many expect the global property/casualty reinsurance industry to continue its downward pricing spiral, Munich RE predicts moderate growth for itself in the near future.
The world’s largest reinsurer disclosed during the annual gathering of reinsurers and brokers in Monte Carlo over the weekend that it expects 1 percent growth over the next three years in the “highly developed” European and North American markets. Munich Re sees a moderately better uptick in Asia-Pacific and Latin America, with growth forecasts of 3 percent and 4 percent, respectively (starting from a much lower level).
Munich Re said that increasing market penetration and rising values of material assets, particularly in emerging markets, will help fuel this projected growth. Another expected benefit: Reinsurance helps support primary insurers when regulatory requirements change and can be useful with emerging technology, environmental or weather risks, Munich Re noted. And those factors are all in play in various global markets.
Munich Re said that most innovations in the industry are “being developed on the borderline between primary insurance and reinsurance.” In other words, knowledge of specialization and savvy about global risk competence is key to helping reinsurance broaden its reach, the company said.
“Innovative insurance solutions in new areas are the key to long-term profitable growth,” Torsten Jeworrek, Munich Re’s reinsurance CEO, said in a statement.
With the launch of negotiations on reinsurance treaty renewals on Jan. 1, 2015, Munich Re cautioned that the industry will still be smacked by “strong competition and extremely low interest rates for investments” and that “years where losses were relatively low are magnifying pressure on prices.”
Jeworrek warned that short-term thinking in this environment will leave reinsurers paying “a higher price later.”
He said that Munich Re will resist pricing pressures and would instead “withdraw from business if necessary.”
Source: Munich Re