Extreme weather will cause insurance premiums to rise higher, Achmea warns

The increasing occurrence of extreme weather is driving up reinsurers’ premiums, which means that the Dutch insurer will also deal with extra costs, Achmea warns. “It is inevitable that part of these extra costs will be passed on in the premium for customers,” said Achmea CEO Bianca Tetteroo at the presentation of the half-year results.

“For example, the recent hail in Italy and floods in Slovenia. For Achmea, it didn’t involve large claims. But you do see that the premiums of reinsurers are rising due to the increasing climate damage worldwide.” Reinsurers are large international parties where Achmea can cover itself against major calamities. For example, damage caused by minor storms is generally not reinsured, but major disasters are.

According to Tetteroo, Achmea negotiates once a year about the premiums it must pay those reinsurers. “That has just happened again, and the premiums have risen by 10 percent.” To keep the premium increase somewhat within limits, Achmea has opted to increase its deductible amount. But that means that the group runs more risk if things go wrong, and it, therefore, has to keep more money in reserve for possible setbacks.

Achmea’s costs have also been rising recently due to the high inflation. The costs for damage repair are increasing because prices are rising everywhere. Personnel costs also rose.

The Achmea CEO said that the more frequent occurrence of extreme weather has to do with climate change. “I don’t think it is something you can reverse, but you can limit the damage.” She stressed that sustainability needs a lot of attention. Preventive measures can also help against weather damage - for example, no more building homes in floodplains and other landscaping.

According to Tetteroo, Achmea had a good first half of the year. The insurer gained more customers, did good business with investments, and managed to increase its operating result by 69 percent to 405 million euros. The total claims burden was lower from January to June than the year before because there were no significant weather calamities in the Netherlands, such as the February storm in 2022. The Turkish part of Achmea suffered about 6 million euros in damage due to the earthquake in that country. “The actual cost of claims was higher, but that was reimbursed by a reinsurer.”