Munich Re says market turmoil will push up rates.

The insurance market is about to turn, with double-digit rate increases on the horizon, according to one of the world’s largest reinsurers.

Munich Re believes the market turmoil will push up prices and benefit reinsurers.

In a bullish statement, Ludger Arnoldussen, a member of Munich Re’s board of management, said: “Given the erosion of many insurers’ capital, the significance of reinsurance as a direct capital substitute is growing. With our capacities, we are able to give primary insurers more headroom, thus also playing a part in counteracting the financial crisis and stabilising the economy.

“In view of the increased cost of capital, the growing demand and the changed risk environment, we expect significantly higher prices, with percentage increases definitely going in to the double-digit range.

“Where Munich Re is unable to obtain the requisite prices, we will not write the business.”