The European insurance sector saw high levels of claims inflation in 2024. In motor-related material damage in particular, claims inflation is still outpacing the Consumer Price Index, and we could see primary insurers continuously increasing premium rates in 2025.
While European life insurers continue to benefit from higher reinvestment rates, the direction of travel is clear, as central banks have been cutting short-term rates since the summer of 2024. Another year of significant natural catastrophes has taken its toll, with primary insurers sharing the burden with reinsurers.
Reinsurers have continued to benefit from a hard market environment in short-tail lines of business, but natural catastrophes may remain a challenge, judging by the massive floods across Europe in the last few years.
In addition, 2025 will also bring some additional layers of regulation and reporting obligations, namely, the Digital Operational Resilience Act (DORA) and Financial Data Access (FIDA) in the EU and the Corporate Sustainability Reporting Directive (CSRD).
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