While preliminary results for 2025 point to growth and improvement in both property and casualty (P&C) and life insurance in the German market, Moody’s warned that underwriting profitability could slow in 2026 assuming natural catastrophe claims normalize and claims inflation is more muted.
Moody’s said preliminary results for 2025 reported by the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft (GDV)) showed a significant improvement in underwriting profitability for property and casualty insurers, while life insurance premiums also increased steadily.
With this in mind, the ratings agency affirmed that the outlook for both sectors is stable.
Notably, the German property and casualty industry’s overall combined ratio (claims and costs as a share of premiums) will increase to 91% this year from 96% in 2024.
According to Moody’s, the improvement reflected higher prices, offsetting claims inflation. As mentioned earlier, property and casualty insurers also benefited from a below-average level of natural catastrophe claims of €2.6 billion, down from €5.5 billion in the previous year.
“Underwriting profitability is likely to weaken in 2026, assuming natural catastrophe claims normalize and claims inflation is more muted,” Moody’s observes.
Meanwhile, in the life insurance sector, gross premiums grew strongly, mainly due to a surge in single premiums.
“The shape of interest rates and the yield curve remains accommodative for German life insurers, supporting investment returns and making their savings policies more attractive relative to bank deposits,” Moody’s added.
Legislative moves aimed at bolstering private retirement savings are said to be underway and are expected to replace the struggling Riester pension product in 2027.
While this could support life insurers’ growth prospects, mandatory features of new products and strict fee caps (still under discussion) may limit insurers’ flexibility.
Moody’s notes that these restrictions may give asset managers an advantage because their product offerings and distribution models differ from traditional life insurance.
