The recent catastrophic losses suffered by German insurers will help to ensure that German corporate insurance managers will continue to face “challenging” renewals for the time being, Andreas Krause, country manager, Germany at Berkshire Hathaway Specialty Insurance (BHSI), told Commercial Risk Europe as customers gather on a virtual basis for the annual GVNW Symposium.
During last year’s annual renewals, GVNW members struggled to find adequate capacity at affordable prices, particularly in cyber and D&O. Mr Krause agrees with most in the market that these will continue to be the most challenging lines as losses continue to mount in these areas.
But Mr Krause, whose fast-growing German team will return to the office in Cologne next week, with many of them meeting for the first time, said adequate capacity can be found as long as customers and brokers engage early.
BHSI does not publish separate figures for its German business but Mr Krause confirmed that it has achieved “satisfactory” underwriting results in its German portfolio. He said top-line growth has been good in recent times and the outlook is positive as his enlarged team returns to the office.
“During 2020 and the course of 2021, our operation in Germany has shown strong top line growth across all lines of business. We were able to grow our team in Germany substantially during that time, so much that half of our BHSI team in Germany has not worked in a BHSI office under normal circumstances (prior to Covid 19),” he said.
“As we are returning to the offices as a full team next week, it will be exciting to have the team together and some teammates will meet in person for the first time. The growth of our business in Germany is not driven by a specific line of business but widely spread across property, casualty, executive and professional lines, as well as marine. We’ve also received positive feedback from brokers and customers, confirming that we have been able to increase our relevance for German customers overall,” added Mr Krause.
The leading insurers have recently published positive half-year results and appear to have come through the Covid-19 crisis in decent shape. But GVNW members should not expect a sudden softening in the market in coming renewals because losses remain high, said Mr Krause.
“As you have recently reported in in Commercial Risk Europe, the insurance industry is facing significant national catastrophe losses in Germany in 2021. In addition, rising loss trends in lines of business like cyber and D&O are continuing. Under these circumstances, I would generally expect a challenging renewal season for all parties involved,” he said.
“BHSI will continue to assess individual exposures and engage in risk dialogue with our customers and brokers. You can expect from us that we will continue to provide stable capacities and transparent pricing,” added Mr Krause.
Cyber and D&O are clearly going to be the most difficult lines for some time yet as losses mount. Mr Krause urged GVNW members to “engage early” to secure capacity in D&O in particular.
“Cyber will be the most challenging exposure for commercial insurance for the coming years. Unfortunately, results show that capacities provided by the market have not been at terms, and pricing levels not sustainable for a risk transfer market. With the uncertainty around rising exposure and potential accumulation of limits, I fear that it will remain a challenging line in commercial insurance,” he said.
“In D&O, I would urge customers to engage early with markets. While views on pricing levels might differ, it is my experience that programmes can be completed with significant capacity levels,” added Mr Krause.
BHSI’s continued expansion in Germany is occurring at “both ends” of the market as the group extends its services for the multinational international programme buyer and at the same time expands downwards into the Mittelstand (middle-market) space, led by recent appointment Natali Bagaric.
“When we launched our presence in Germany, we focused on major accounts and participations in large programmes or excess layers. During the past five years, we have invested in underwriting, risk engineering, multinational and operations in order to become a trusted lead carrier. Our move into the Mittelstand segment shows the progress we have made in building our platform in Germany. I am excited that Natali Bagaric is now onboard and will lead our property underwriting team in this segment. She will closely collaborate with other lines of business to ensure we deliver BHSI´s capabilities to our Mittelstand customers. While we are now adding this new market segment, we will continue to expand our presence in the major accounts space,” explained Mr Krause.