05 Aug 2020
Posted in Insurance
Nascent pandemic insurance receiving significant interest in Germany
German insurers have been somewhat protected by the set-up of a government business interruption fund and are offering pandemic cover to businesses, which will boost premiums, according to GlobalData, a leading data and analytics company.
The fund was launched in June 2020, which alongside policy wording often excluding pandemics means the countries’ insurers are well sheltered from potentially huge business claims.
GlobalData forecasts the overall German insurance industry GWP to increase in 2020, despite the disruption. GlobalData expects premiums to rise by 1.9% in 2020, compared to 2.6% previously. The company expects the largest hit in growth to be seen in 2021, where it forecasts just 0.2% growth, compared to 2.7% previously. This is because GlobalData expects renewal rates to suffer across a range of lines, with small businesses under extreme pressure, and people less reliant on cars with increased working from home. However, the company does expect growth to return close to previously expected levels by 2023 (2.7% compared to 2.9%).
Deblina Mitra, Insurance Analyst at GlobalData, comments: “While German insurers will escape vast payouts for business interruption due to policy wordings and government support, they face other problems. Germany is a leading country for organizing global trade shows, for example, and cancellations costs have soared to an estimated EUR3.0 billion (US$3.2bn) in 2020. It is also an export-heavy economy, as the country accounts for 47% of GDP, so the overall economy has been hit hard by its dependence on China.
“Furthermore, certain domestic insurers have offered to refund motor premiums for unused vehicles, without even requiring decommissioning of the vehicle. This is likely to create consumer confidence in the long run, and could help keep retention high, but will hit profits in 2020.”