Hot Seat: Prices up but further work needed–Christian Hinsch, HDI-Gerling Industrie

The insurer managed to achieve price rises of 3%, the same level that the company saw in the year-end 2012 renewals round. "However, the premium level before these adjustments was 15% lower than the required premium," Mr Hinsch added. Mr Hinsch was not prepared to name figures for 2013 because Talanx is now a listed company and therefore bound by stringent compliance rules. But he did suggest that the level of losses and investment income experienced last year would not relieve pressure on prices. "The combined ratio in industrial fire insurance is now well above the 100% mark," said Mr Hinsch. "This has been the case for the past four years," he added.hideLow interest rates continue to affect the returns on investments and put further pressure on underwriting for all insurers. This is why HDI-Gerling Industrie was forced to react, said Mr Hinsch. "We are not talking simply about blunt price rises but also about a whole range of other measures," he explained. Higher deductibles and other changes in conditions featured, as well as bigger efforts in loss prevention. "The price-risk ratio is being changed by all these measures," he explained. HDI is interested in a long-lasting partnership, said Mr Hinsch. Most customers are too, but not all, he added. "There was always a certain willingness to pay more after large losses," he said. But today some customers take a very aggressive approach. "They then say we just had a major loss which will not occur again for another 100 years, why can't you just lower the prices?" said Mr Hinsch. Brokers naturally try to keep prices down. "They are afraid of losing mandates to their rivals when insurers raise prices and their rival may offer a better deal," Mr Hinsch said. But the insurer said that he can understand that attitude. "After all, it's not the broker's role to worry about the insurer's bottom line," he said. Apart from fire insurance, negative figures in marine and industrial legal expenses are hurting. "In 2013, nat cats played an important role," Mr Hinsch said. In residential buildings there was a concentration of value of €100 per square metre on a storage area for new cars priced at €2,500. "Thus we can image how the hailstorm affected Wolfsburg!" he added, referring to the home of Volkswagen. HDI-Gerling Industrie is one of VW's main insurers. The hailstorm caused losses that totalled €43m in fire, marine and motor fleets, Mr Hinsch said. "But we were lucky in Stuttgart; the hail did not fall in Untertürkheim but south of Stuttgart." Daimler's main plants are located in Untertürkheim. Mr Hinsch claims that his company's market share of German industrial insurance for large corporations is 30%. "When you have such a large market share, it's obvious that we feel the effects of nat cats such as the hailstorm much more," he said. In marine insurance, the storage locations suffered the greatest losses. There were also some losses in ocean hull. Industrial legal expenses insurance has also led to concern at HDI. "The risk situation has deteriorated over the past 10 years by a factor of three or four," explained Mr Hinsch. This is partly because this line of business only used to cover traffic offences but also now also covers the costs of large litigation. Losses could be anything up to several million euros. Mr Hinsch is happier about liability, a line in which HDI-Gerling Industrie is by far the market leader, he claimed. None of the recent offensives launched by new rivals in the German market have been able to pose a real threat, according to Mr Hinsch. "Industrial companies look for experienced and calm third party insurers who are capable of settling a loss in the US professionally," he explained. This was one of the reasons why his company has so many big customers in France and in other European countries. Mr Hinsch said that companies are becoming increasingly interested in cyber liability insurance. He conceded that many companies are still just dipping their toes into the market and looking for information. But others have already taken out cover, he added. HDI-Gerling recorded rising prices in motor fleet in 2013 for the fourth year in a row. "In 2013, we had expected positive figures but the hailstorm dashed those hopes," he said. The company is very interested in telematics [the integrated use of telecommunications and informatics] for motor fleets. "We are testing this in the United Kingdom where all motor policies are done online on the basis of telematics," he said. Given that the Hannover-based group has no private customers in the UK, this is possible. The company has been cooperating with Daimler and Bosch for some time in this area. HDI-Gerling Industrie would like to continue its recent impressive expansion course but Mr Hinsch did not elaborate on more concrete goals. Over the last 15 years the insurer has managed to lift international business from €150m to €1.5bn and tits number of offices from 10 to 39. This was partly fuelled by the takeover of Cologne-based Gerling that ran into financial difficulties in 2006. "Overall, our foreign business is going very well," said Mr Hinsch. However, there were problems in 2013 at the largest affiliate in the Netherlands, which was created after the acquisition of Nassau at the end of 2010 and currently has premium income of €350m. Talanx reportedly sacked the local chief executive and sent an experienced manager from Hannover. Mr Hinsch did not provide any more details. The group is changing the status of its affiliate in the Netherlands to that of a branch office of the German company to put it on the same standing as its operations in Spain and Belgium. This status saves capital and makes taxation matters easier to handle. Talanx will continue its long-standing cooperation with the British insurer RSA. But it appears that the relationship is not as important as it used to be when the German group relied on the insurer to provide it with global reach. Times have changed dramatically at HDI in recent years as it steadily turns itself into a serious international insurance group. "We use the RSA network for less than five per cent of our foreign networking," Mr Hinsch told CRE. "We support groups with our own network as leading insurer or sole insurer. We can do that but many of our rivals cannot offer such a service, especially the newcomers," he added.

Hot Seat: Prices up but further work needed–Christian Hinsch, HDI-Gerling Industrie

Want to read this article?

Read Next

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Want to read this article?

Read Next

Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Premium increases continue to slow down in US commercial P&C market

Berkshire Hathaway discloses minority $6.72bn stake in Chubb

Related Articles