French market reassessing nat cat appetite

The growing frequency and severity of weather-related events such as drought, storms and wildfires is prompting French insurers and reinsurers to rethink their appetite and pricing for natural catastrophe risks, according to a new report from rating agency AM Best.

The Best’s Market Segment Report, “French Insurers Reconsider Natural Catastrophe Assumptions Following Another Very Expensive Year,” notes that record-breaking temperatures and severe droughts led to significant property damage losses in 2022. 

The latest estimate from France Assureurs puts insurers’ weather-related natural catastrophe losses for 2022 at around EUR 10 billion, prompting reinsurers to push up prices and tighten conditions in the January 1 renewals, the rating agency noted.

Of particular note last year was the extraordinary scale of hailstorm-related losses for the country.

According to Swiss RE, in the spring and summer 2022, France was hit by numerous severe convective storms causing unprecedented losses, mainly due to hail damage. Estimates of the French Federation of Insurance, France Assureurs, amount to a total insured hail loss of around EUR 4.8 billion from more than one million claims for the year 2022, with about EUR 3 billion in property loss. 

Such a figure makes 2022 the costliest year by far for France in terms of hail losses, exceeding the previous record year 2014 by a factor of three to four. 

“Swiss Re analysis shows that the frequency of costly hail events in France is underestimated in existing industry benchmarks, suggesting that adjustments to insurance risk assessment and pricing are needed to ensure that insurance products for hail remain sustainable over the long term,” the reinsurer has noted.