The recession has had little impacts on contracts due for renewal in July, Munich Re said this week.
The world’s largest reinsurer by premium income said demand for reinsurance policies “continues to be pronounced”, especially for policies that cover natural disasters.
Some sectors will suffer, Munich Re said, as reduced sales of motor insurance, life insurance, and pensions provisions has knocked demand for reinsurance.
Furthermore, during a recession insurance firms suffer higher damage claims in several areas, including credit insurance, liability insurance, and workers’ disability insurance.
Rate increases of 3% to 5% are needed to compensate for the downturn in demand and the increased claims, Munich Re said.
In January and April contract renewals, the reinsurer secured average rate rises of 3% and 7% respectively. CEO Joerg Schneider said he is cautiously optimistic that rate rises will compensate for the effects of recession.
