Munich Re CEO Joachim Wenning has rejected calls to lower the price of natural catastrophe cover, describing such demands as “noise” and “nonsense”.

Speaking to the Financial Times, he said the rise in reinsurance costs reflected increased claims and expenses rather than any attempt to exploit the market.

The sharp rise in reinsurance rates has contributed to growing concerns about consumers’ ability to afford insurance as they look to protect their homes and businesses from natural disasters such as wildfires and severe storms.

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In the interview, Wenning pushed back against suggestions that reinsurers should help ease the burden on businesses and consumers. He noted that while the industry has seen big gains from higher rates, those gains come after years of big losses.

Primary insurers, which rely on reinsurers for coverage, can cut costs by buying less reinsurance, Winning said.

Munich Re’s record profits in the first half of the year were partly driven by higher property coverage costs, Wenning said, with the company now worth €65 billion.

“I’ve never heard the opposite of that, when the market cycle is a little bit quieter, which is: Give the reinsurers more, they deserve it, because they’re not making enough money. That’s very unequal, that’s noise, that’s nonsense,” Wenning said.

Despite the strong financial position of reinsurers, Wenning acknowledged that affordability could become a growing issue for consumers in high-risk areas, especially as climate change leads to more frequent and severe natural disasters.

He warned that insurance costs would rise accordingly, making it difficult for businesses and families to afford coverage in disaster-prone areas.

Winning also commented on proposals to strengthen public-private partnerships to manage the financial fallout from natural disasters, with some policymakers proposing to expand existing schemes covering floods and extreme weather.

He said any such programs should be designed to avoid distorting prices, stressing that higher-risk properties should carry higher insurance premiums.

“If you have a property in a high-risk area, you have to pay more. If not, we spread the risk across everyone,” he said.

Read more: Munich Re looks to appropriate risk pricing amid rising complexity and loss trends

Wenning warned that reducing financial incentives for property owners to mitigate their risks could lead to higher losses in future disasters. He also stressed that reinsurers maintain high solvency ratios to protect against large losses.

For example, Munich Re’s solvency ratio rose to 287% in the first half of the year, well above its target range of 175% to 220%, indicating that the company has excess capital.

On potential mergers and acquisitions, Wenning noted that Munich Re could consider expanding its specialty insurance portfolio in the US or growing its core insurance division, Ergo, in markets where it already operates. He said deals in the range of €1 billion to €5 billion were realistic.

Wenning also touched on the threat posed by large-scale cyber attacks. He suggested that it may be necessary to create a public-private system to share losses in the event of a major incident, such as an attack that disrupts a country’s energy supply.

Wenning pointed out that the market currently lacks the capacity to provide sufficient coverage for large companies for such events, leaving them to manage and mitigate the risks themselves.

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