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Insurers in the Netherlands must respond to new and changing risks

Press release

Published: 16 November 2022

Het centrum van Valkenburg, een aantal maanden na de watersnood. De overstromingen in Limburg van de zomer in 2021 richtten veel schade aan

Dutch households and businesses have very limited insurance cover against new and changing risks, such as those from floods and cyberattacks. Responding to this situation offers Dutch insurers opportunities to continue fulfilling their role in society and strengthen their future resilience. This will require a comprehensive approach, in which both insurers and government have a role to play. In tandem, they could raise risk awareness and explore how new insurance markets can be created for such risks, which have thus far been difficult to insure.

This is what the Director of our Insurance Supervision division Maarten Gelderman said at this morning’s press conference marking the release of a new DNB study on the role of the insurance sector in the Dutch economy, “Insurers in a changing world”. At the press conference, Executive Board Member of Supervision Steven Maijoor also presented our annual Dutch-language publication “Toezicht in beeld”. In it, we discuss the past year’s achievements and outline the priorities in our supervision for the year ahead.

Appropriate insurance products

Insurers and the government can act in unison making sure households and businesses are aware of the risks of flooding and cyberincidents so that they can make informed decisions on whether to take out additional insurance. The government should provide more clarity about the terms on which it will pay out compensation, allowing insurers to make more reliable risks projections and market appropriate insurance products. 

Healthy insurance sector

Such an approach could also contribute to a healthy Dutch insurance sector. The sector has seen further consolidation in recent years, as premium income fell in life insurance and grew in the non-life market. With higher interest rates benefiting insurers in principle, recent increases in inflation could push up costs and claims.

Maintaining mutual solidarity

The sector also faces stiff competition, in part because foreign insurers and tech companies have gained a foothold in the Dutch market. While this is beneficial to innovation and makes product ranges more varied, there remains a need for insurers with in-depth knowledge of local conditions that are capable of responding effectively to risks that are specific to the Dutch context.

Moreover, fiercer competition in a saturated market may lead insurers to deploy big data and advanced pricing techniques to a greater extent to retain profitable customers. Not only does this put other insurers at a disadvantage, it can also put pressure on mutual solidarity and lead to specific groups in society no longer being able to afford insurance. If necessary, it is up to lawmakers to create a regulatory framework limiting the use of data and techniques. This must be done at the European level to ensure a level playing field between insurers.

Our supervision going forward

The past year has illustrated the importance of a supervisor being agile and responsive to current events. In addition to the significant humanitarian consequences, the economic impact of the war in Ukraine is making itself felt. High inflation, rising interest rates and geopolitical uncertainty are weighing on the economic outlook. While Dutch financial institutions are in good shape on average in 2022, the rapidly changing economic environment also brings risks. It is vital that we respond appropriately to these risks to ensure the soundness and reliability of the financial system.

At the same time, we must keep an eye out for long-term challenges. This is why, in addition to our regular supervision, we will maintain a relentless focus on the priorities we defined in our Supervisory Strategy 2021-2024: technological innovation, sustainability and combating financial crime. We will continue to question institutions on the sustainability of their business model, monitor that they have their cyber resilience measures in place, and remain committed to a targeted approach to financial crime. In the coming year, we will continue to engage with institutions on our supervision and supervisory expectations.

End of press release

For more information, please contact Tobias Oudejans at +31 652 496 961.

Insurers in a changing world: Opportunities and risks in times of climate change, digitisation and inflation

Download Insurers in a changing world: Opportunities and risks in times of climate change, digitisation and inflation

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