Hurricane Frances caused great devastation on the Florida coast: Munich Re criticizes the current climate policy.
(Photo: dpa)
Munich The consequences of climate change also affect reinsurers such as the industry leader Munich Re. Both the amount of damage caused by individual extreme weather events and the number of incidents in general have been increasing for years, Munich Re boss Joachim Wenning reported on Friday at the group’s virtual general meeting.
According to Wenning, politicians worldwide are not doing enough to limit the consequences of climate change: “There are many good declarations of intent. Complete and, above all, binding roadmaps per country, practically none.”
The Munich Re boss spoke of a “bucking game” in which the culprits of the misery are identified while global CO2 emissions continue to rise. For example, he also criticizes the reporting requirements imposed on companies by politicians, which cost a lot of money but would not solve the problem.
That means: “In the absence of government leadership, private engagement will not lead to the climate goal of Net Zero by 2050.”
The reinsurer recorded losses of 1.6 billion euros from Hurricane Ian in the USA alone, by far the most costly natural catastrophe last year. Predicting such events is becoming increasingly difficult for insurers.
Statistical models are only of limited use
At the same time, protecting against natural catastrophes has long been one of Munich Re’s most profitable business areas: “We have the business under control,” said Wenning.
The recent contract renewals have been promising. “Where competitors had to lose feathers, our risk appetite and our capacity offer are still high,” said the head of the Dax group.
In addition, the quality of the portfolio has been increased with improved contractual conditions, higher customer deductibles and separate prices for risks that are also covered.
However, Wenning is concerned about the growing unpredictability of climate change and its consequences. So far, Munich Re has been able to rely on time series and a statistical database and thus be able to assess risks very well.
>> Read here: The climate crisis could cost Germany 900 billion euros
Andreas Thomae, fund manager at Deka Invest and responsible for around 1.3 percent of Munich Re’s share capital, explains: “Now the situation is that the damage caused by climate change is tending to continue to increase and major events are occurring more frequently than is statistically possible in retrospect should be the case.”
Thomae is concerned with the question of whether the group has enough assertiveness to pass on the higher costs to customers in the form of increasing premiums.
Criticism of excessive reporting obligations
CEO Wenning criticizes what he sees as excessive sustainability reporting, which costs Munich Re several tens of millions of euros a year. At best, the fight against global warming will cost so much money that resources should not be used for excessive reporting.
At the Annual General Meeting, the CEO of Munich Re criticized global climate policy.
(Photo: Munich Re)
“The great effort should therefore not be made to report on a problem that we have all known for a long time,” said Wenning literally. Instead, the problem should be better solved with money used for reporting obligations.
Cyber attacks carry high risks
Shareholders are also concerned about the increasing number of serious cyber attacks, which Munich Re protects as one of the market leaders. Deka fund manager Thomae spoke of “sometimes incalculable risks” with cyber insurance. At the same time, however, he also sees opportunities for the insurance business.
>> Read here: Protection from hackers – Volksbanks are asking customers to make their online banking password more complicated
Wenning explains that one of his company’s tasks is to make new risks such as those in cyberspace insurable. “So far, every single underwriting year has been profitable for us.” However, the long-term situation with cyber risks is the same as with natural hazards. This could lead to years of exceptionally high damage. “Many good years must be able to finance a few bad years,” says Wenning.
There was also criticism of the further appointment of the auditor EY in view of the history of his years of auditing at the scandalous company Wirecard. Investor advocate Daniela Bergdolt from DSW spoke of “reputational damage” by this auditor.
Investor advocate speaks of “reputational damage”
Chairman of the Supervisory Board Nikolaus von Bomhard defended this decision. “In the opinion of the Supervisory Board, the responsible auditors at Munich Re have very good knowledge of business activities.”
>> Read here: Auditor EY blows off split – “disappointment and lack of understanding” in Germany
The withdrawal from the Net Zero Insurance Alliance also caused criticism among shareholders. “This weakens the joint efforts to decarbonize the insurance industry,” criticized Deka expert Thomae.
Irrespective of this, Munich Re boss Wenning promised further climate commitment. “In order to avoid antitrust risks – and only because of this – we recently left the Net Zero Insurance Alliance.”
More: Quarterly figures – Munich Re exceeds expectations.