Best’s Market Segment Outlook: German Non-Life Sector Is Stable. Germany’s robust economy continues to drive growth in the non-life insurance market. Technical profitability is solid and is expected to remain so, underpinned by good underwriting discipline and sustainable rate adjustments. For the most part, non-life insurers benefit from very strong balance sheets, which position them well to withstand evolving market conditions.
In A.M. Best’s view, Germany’s non-life insurance market has solid earnings potential over the short to medium term, underpinned by robust underwriting profitability. The market has exhibited effective cycle management and good underwriting discipline over the past 15 years.
The low interest rate environment continues to put negative pressure on companies’ earnings, and yields are likely to remain depressed in the near term. In spite of this, investment income is expected to continue to make a stable, albeit relatively modest, contribution to earnings, as companies tend to favour a conservative investment strategy.
The report adds progressive advancements in digitalisation and data analytics increasingly shape the German non-life insurance market, as more participants focus on digital transformation and innovation. A.M. Best believes that companies that are successful in their digital evolution will likely benefit from higher growth, lower expenses, better policyholder retention and ultimately long-term success, compared with their less progressive peers. Advancements include the development of new insurance products such as cyber insurance, enhanced underwriting analytics and superior claims management and mitigation.
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