11 September 2018 13:30
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Although the rates of interest highest and best economic conditions will improve profitability of the insurers, the gap will not be totally closed, ” says Swiss Re in a recent study sigma.
In effect, the reinsurer anticipates that the tightening labour market will push up wages and claims. The report finds that premiums will increase further as claims for the insurers to obtain a sustainable improvement in their profitability.
The profitability demand an increase in “substantial” premiums
Swiss Re argues that a substantial increase in premiums is needed to restore profitability in the property and casualty insurance. “The report indicates that a greater work must be done to improve the underwriting performance, if insurers want to address the deficits of return current. “
The reinsurer estimates that the margins in the subscription will need to improve by 5 to 9 percentage points in the western markets and in Japan for the shareholders to get a return on equity of 10 %.
The disasters of 2017 offer an inflection
According to the report, the season 2017 of disasters has offered a shift for insurers, who have the opportunity to increase rates to correct the price. Already, the rates insurance companies have started to grow at the end of 2017.
“The losses related to catastrophes occurring in 2017 caused a slight change of the dynamics of the market,” explains Edouard Schmid, chief underwriting officer, Swiss Re. However, it remains to see at what point the market is strong and sustainable. The rate increases for the segments in insurance companies not affected by the losses, for example, have been lower than initial expectations. “
In the insurance sector to private individuals, there has been a hardening of rates moderate on several key markets for a few years, ” added Mr Schmid.