In Germany, catastrophe excess of loss reinsurance rates were flat to down 4 percent at the January 1, 2011 renewal, with stop loss and aggregate excess of loss flat year over year. Loss affected programs, of which there were not many, showed increases of 5 percent to 15 percent from 2010 to 2011. For working layers and high-risk programs in per risk treaties, rates were flat.
The primary market outlook in Germany is stable for 2011. In the forefront of Solvency II, the pressure to explore M & A opportunities is expected to increase.
There were no major market losses of a caliber high enough to impact reinsurance-buying behavior, as Windstorm Xynthia mostly hit cedent retentions. The frequency of small losses did affect frequency covers, with minor implications for reinsurance pricing. Without generic growth in the market, exposures have remained stable. Catastrophe capacity has increased to facilitate compliance with Solvency II and rating agency requirements, and Quantitative Impact Study 5 (QIS 5) has put some pressure on pure stop loss or aggregate excess of loss covers due to insufficient horizontal capacity (no reinstatements). However, there have been no changes to reinsurance structures so far.
Reinsurance market capacity for catastrophe reached approximately EUR7 billion this year and was stable. A few markets exited or reduced capacity. This was offset by increased risk appetite from markets with a higher focus on Germany.
Long-tail liability reinsurance rates remained stable at Germany’s January 1, 2011 reinsurance renewal. Loss-free programs were flat. General third-party liability (GTPL) was flat to up 5 percent for per risk working layers, while motor third-party liability (MTPL) was up 5 percent to 10 percent. High-risk excess programs were stable. GTPL and MTPL were heavily influenced by the development of the interest rates and the economic cycle. Rates are expected to increase next year.
There has been virtually no change in exposure for MTPL, while GTPL has seen a slight increase because of the economic recovery. Premiums have increased slightly for MTPL and have remained stable for GTPL. There have been no structural changes to covers, and capacity continues to be ample.