According to industry reports, the New Zealand and Australia reinsurance markets stabilised mid-way through 2024 after a difficult period. One of the current challenges, say stakeholders, is sustaining that stability and guarding it against future market shocks.
Anja Linsmaier (pictured above) is head of non-life for Munich Re Australasia. She said two major issues will likely require her firm’s attention and effort during 2025.
“Firstly, ensuring the resiliency and sustainability of the reinsurance market will remain a top priority,” said the Sydney-based leader.
Linsmaier said she’ll be keeping a close eye on Munich Re’s pricing models
“A key aspect of this will be the ongoing refinement of our pricing models for non-peak perils, taking into account the increasing frequency and severity of natural disasters and emerging risks,” she said.
Linsmaier said global instability is expected to exacerbate these risks.
“Particularly with regards to strike, riots, and civil commotions (SRCC) and political violence, as evidenced by the significant economic and insured losses in New Caledonia,” she said.
Estimates in news reports said that the May riots in the French territory resulted in more than US$1 billion in losses. Even before those losses, a Swiss Re study earlier in the year said: “Undoubtedly, the impacts of Strikes, Riots and Civil Commotion (SRCC) are at a historical high.”
Mohit Pande, chief underwriting officer for property and the report’s author, cited riots in France in 2023, the Black Lives Matter movement in 2020 and Chilean riots a few years prior. He said these events were evidence of “a massive escalation in SRCC events, resulting in significant loss spikes.”
In Australia, a “critical” priority for Linsmaier in 2025 is continuing to support the industry's response to the government’s parliamentary inquiry into the 2022 floods. The inquiry’s report, released in October, contained 86 recommendations. If fully adopted, they are expected to significantly change the way insurers deal with floods, claims and impacted customers.
One important recommendation calls for the registration of the General Insurance Code of Practice with the Australian Securities and Investments Commission (ASIC). Also, that the Code be made enforceable through insurance contracts
“It presents an opportunity for the industry to come together and contribute to building a more resilient Australia,” she said. “As a responsible and proactive participant in the local reinsurance market, we are committed to doing our part in supporting these efforts.”
Looking back on 2024, the Munich Re head suggested that reinsurers took advantage of this comparatively quiet year for perils and nat cats.
“Fortunately, the re/insurance industry in New Zealand and Australia experienced a relatively calm 2024, devoid of major disruptions or catastrophe events,” said Linsmaier. “This allowed us to focus on the future and be proactive in safeguarding a sustainable and resilient reinsurance market.”
“However, we have taken valuable lessons from the experience,” she said. “One key takeaway has been the importance of promptly adjusting retention levels in response to growth and inflation.”
Linsmaier said, with the benefit of hindsight, the substantial increase in retention levels in recent years “could potentially have been addressed earlier.”
However, she said the industry’s reflections on complex claims events in recent years, including the COVID-19 pandemic, has highlighted the importance of clarity around coverage and aggregation.
“These lessons will be invaluable as we navigate the evolving risk landscape,” said Linsmaier.
Other important learnings concerning recruitment and talent challenges, she said, came from an “inspiring” event in 2024.
This Munich Re event, hosted by the firm annually at Sydney’s Dive-In Festival, included a panel discussion on Unlocking the Power of Intergenerational Inclusion.
“As our industry prepares for a significant change in guard over the next five to 10 years, it's clear that embracing and celebrating diverse perspectives and experiences will be key to harnessing the full potential of our teams and tapping into the collective wisdom and expertise of our people, regardless of age or background,” said Linsmeier.
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