Fitch Ratings has conducted a mid-year review of non-life insurance premium trends across various European markets, revealing diverse dynamics among insurers. According to Fitch, non-life insurers are grappling with high claims inflation and reinsurance costs, prompting efforts to raise premiums. However, the success of these endeavors varies by local market conditions.
Fitch initially anticipated robust premium increases in the UK and Italy, foreseeing potential profitability recoveries as price hikes outpaced inflation. This optimism led Fitch to upgrade its sector outlooks for the UK non-life company market, London insurance market, and Italian non-life sector for 2024.
Conversely, Fitch categorized non-life sector outlooks across the rest of Europe as ‘neutral,’ citing constraints on price rises due to competitive pressures and societal expectations. In Germany, however, Fitch noted an ‘improving’ outlook driven by unexpectedly strong premium hikes in motor and buildings insurance, which bolstered profitability prospects following a downturn in 2023.
Fitch cautioned that the full financial benefits of these premium adjustments, coupled with easing inflation and higher fixed-income yields, will likely materialize gradually, with clarity expected by 2025 for German insurers and beyond for others.
Regarding France, the Netherlands, and Spain, Fitch maintained a ‘neutral’ outlook, attributing subdued premium increases to market competition and societal factors. Despite this, Fitch anticipates marginal improvements in profitability this year, supported by modest price adjustments and favorable economic conditions.
Addressing recent political uncertainties in France, Fitch clarified that it does not foresee significant credit implications for domestic insurers, echoing its earlier assessment that these developments have not impacted the ratings of French insurers.
In summary, Fitch’s analysis underscores the nuanced landscape of non-life insurance premiums across Europe, shaped by regional economic conditions, competitive dynamics, and regulatory environments.
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