Munich Re board member Stefan Golling has raised concerns for the reinsurance industry.
Speaking at the Rendez-Vous de Septembre in Monte Carlo, Golling warned that casualty insurance pricing hasn’t kept up with rising claims, leaving the sector vulnerable.
The industry, Golling noted, has been “too optimistic” about trends in casualty claims, including the effects of inflation and what he described as “legal system abuse.”
He expressed frustration that insurers react to crises with sharp rate hikes but then let those increases fall behind growing exposures over time.
“We cannot continue like that. We need to stop fooling ourselves about rate increases,” he stated.
The most recent July renewals saw reinsurers celebrating nominal rate increases of 8-10%, but Golling pointed out that claims trends have been rising even faster, by 10-12%.
In his view, these shortfalls are unsustainable.
While fellow Munich Re board member Thomas Blunck acknowledged that casualty is a complex field—especially in areas like motor liability, where Munich Re has seen benefits—he agreed with Golling’s overall assessment.
Blunck noted that the US liability sector, which makes up just 6-7% of Munich Re’s total premiums, has been particularly challenging.
These comments echo earlier remarks from Hannover Re CEO Jean-Jacques Henchoz, who called for further pricing corrections in the US casualty market.
Henchoz was especially critical of litigation financing, arguing that it harms not just insurers but society as a whole.
Managing Frequency, Navigating Risk
Despite concerns about growing losses from natural catastrophes, Golling remained optimistic about the industry’s ability to manage high-frequency, low-severity claims.
He asserted that reinsurance still offers the best solutions for non-peak risks but emphasized the need for more rigorous risk prevention and exposure management.
“If you know certain events occur almost every year, you need better risk prevention, focus on exposure management, and ensure original rates in the market are adequate,” Golling explained.
Without these measures, no amount of reinsurance or frequency coverage will fix a fundamentally loss-making business.
His message is clear: if the insurance market fails to price its risks correctly from the outset, even the best reinsurance strategies won’t be able to rescue it.
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