Deterioration in Insurer Mood in Germany's First Quarter of 2025
German insurance industries' sentiment during Q1
The sentiment among German insurers has taken a downturn at the beginning of 2025. According to the German Insurance Association (GDV), the business climate index for the period of January to March has decreased by 7.2 points to 18.0 points compared to the previous quarter, as reported by the Munich-based Ifo Institute.
Jörg Asmussen, GDV's CEO, stated, "Even insurers are not immune to the economic contraction in the real economy." He, however, expressed cautious optimism, asserting that the sector is well-positioned.
The Ifo Institute conducts surveys quarterly, gathering insights from approximately 150 insurers from various sectors about their business situation and prospects. Life insurers, according to GDV, view their business situation favorably overall and significantly in new business. Nonetheless, the barometer for business expectations dropped significantly by 46.2 points to 0.4 points in the first quarter.
Asmussen attributed this decline to the weak growth forecast for the German economy and ongoing global uncertainty. In property and casualty insurance, decreasing claims numbers led to a more positive assessment of the current situation, while business expectations were less promising.
Recent reports from major German insurance and reinsurance companies provide a clear snapshot of conditions and outlooks as of Q1 2025. German reinsurers Munich Re and Hannover Re reported substantial losses due to significant wildfire claims from Los Angeles, which negatively impacted their Q1 profits. Despite these substantial major-loss expenditures, both companies upheld their full-year profit forecasts.
The insurance market overall provided a source of stability, with buyer-friendly conditions prevailing despite some exceptions. Munich Re's April renewals saw considerable premium growth and a slight decrease in prices, indicating competitive but still favorable conditions. HDI Global SE, another major German insurer, reported a 10% year-on-year increase in insurance revenue and a boost in operating profit, reflecting improved underwriting performance and ongoing inflation-linked price adjustments.
Although climate-related risks are rising, given the increased frequency of natural catastrophes, the outlook for the remainder of 2025 remains positive. Companies are adapting pricing and terms to reflect changing risk landscapes while still achieving growth and strong technical results.
In summary, the German insurance sector faced significant large losses in Q1 2025 due to natural catastrophes, but market conditions remained stable and buyer-friendly. Leading insurers anticipate continued profitability for the year, leveraging growth in premiums, improved underwriting, and effective risk management strategies. While climate-related risks are rising, the sector's outlook remains positive.
The community policy of some insurers may see adjustments due to the increasing climate-related risks and the growing frequency of natural catastrophes. In an effort to mitigate these risks, vocational training programs could be implemented to equip employees with the necessary skills to manage and assess climate-related risks effectively. To support this endeavor, under the umbrella of the German Insurance Association (GDV), finance could be directed towards investing in vocational training programs for the insurance sector. This investment in vocational training, in conjunction with effective risk management strategies, could bolster the overall business of insurers and contribute to the sector's continued profitability and positive outlook for the remainder of 2025.
![Giant marine mammal makes massive acquisition of approximately 118,000 Aave [AAVE] since May 1,...](/en/img/20250530050820_pexels-image-search-image-description-your-specific-description.jpeg)
