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Munich Re Sees Stable Prices, Contract Terms with Insurers in 2013

Posted on 23 Oct 2012 by Neilson

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Munich Re and pricingGerman reinsurer Munich Re today said it expects the prices and terms for contracts with insurers to remain stable in 2013 despite the negative impact of the continued difficult conditions for the industry.

Prices are expected to stabilize and even go slightly up in casualty insurance.

The sovereign debt and banking crisis and the uncertain economic environment are becoming a greater challenge for insurers, the group said. Interest rates are still low and this has the main adverse impact on capital investments, Munich Re executive Ludger Arnoldussen said. They keep putting the industry's strong capital base to the test. Munich Re also warned of the increasing risk of inflation for severe bodily injury claims because of the rise in healthcare costs.

According to Arnoldussen, insurers should rely on solid income from their core business in hard times and not on profit from capital investments.

Another challenge for insurers and reinsurers is the growth in the costs for bodily injury claims in long-tail business. This leads to inflation in severe bodily injury claims, which has been underestimated in the past, Arnoldussen added.