Reinsurer’s greater involvement spurred by rising prices at 1 January
German reinsurance group Hanover Re has expanded its presence in UK motor reinsurance after the significant price hikes seen at the 1 January renewals.
The reinsurer said that prices for non-proportional UK motor reinsurance, which pays out after an insurer’s losses reach a certain point, “climbed sharply”. This prompted the company to extend its involvement in the business.
Hannover Re’s comments follow reports from reinsurance brokers of big spikes in UK motor non-proportional reinsurance rates at the 1 January 2013 renewals.
Guy Carpenter, for example, said UK non-proportional motor rates across its portfolio had increased by 25% on average. The price increases were driven mainly by reinsurers’ concerns about the growing use of periodic payment orders to settle severe bodily injury claims.
Hannover Re also reported rate increases elsewhere, particularly in loss-making lines such as marine. It added that Superstorm Sandy, which hit the US East Coast in October 2012, had a “stabilising effect” on prices.
The reinsurer said it was pleased with the prices it achieved at the renewals. Hannover Re chief executive Ulrich Wallin said: “Although the environment is considerably more competitive than in the previous year, our selective underwriting approach enabled us to achieve a price level at least on a par with the quality of the good 2012 financial year.”
About two-thirds of Hannover Re’s book, representing premiums of €3.79bn, came up for renewal at 1 January.
Of this, a premium volume of €3.48bn was renewed, while treaties worth €308m were either cancelled or renewed in modified form. Including increases of €348m from new or modified treaties and thanks to improved prices, the total renewed premium volume came in at €3.82bn – equivalent to growth of 1%.
Hannover Re said the increase was moderate because of “significantly more intense competition”.