Global insurance and reinsurance group Allianz has lifted its estimate for gross losses from storm Bernd’s impacts in Europe and the severe flooding that struck the region by 22% to €1.1 billion.
Previously, Allianz had pegged its losses from the European floods at €900 million, a figure that it said would be reduced significantly through a major reinsurance recovery.
Allianz had said that it expected its excess-of-loss reinsurance tower would be triggered by the flooding claims and that more than half of the gross loss burden would be recovered, with its net loss set to be reduced to around €400 million.
It’s likely that even though the gross loss has risen by 22%, the net impact to Allianz could stay roughly the same, meaning that the companies reinsurance recovery could now be as much as €700 million, although we cannot be certain of this as Allianz has not disclosed a fresh net loss figure.
The €1.1 billion includes losses suffered by Allianz Global Corporate & Specialty (AGCS).
Allianz expects that around €700 million of the flood losses will be from Germany, the country worst impacted by the rainfall and flooding from Bernd.
AGCS expects more than €100 million of claims from clients in Germany and the Benelux, the company said.
Allianz noted that it paid out €917 million for claims from the Elbe flooding in 2002, which including price increases could be as much as €1.76 billion today.
“Depending on which value you use for the 2002 flood, the value then or the current value, Ilse or Bernd is the biggest event so far in the entire history of Allianz,” explained Thorsten Fromhold, Head of Portfolio Management & Retrocession at Allianz Re.
Flood events like the one seen in Europe in July are expected to occur more frequently because of climate change, Allianz said.
Katherine Wenigmann, natural catastrophe (NatCat) risk expert at Allianz Re, commented, “We know that a warmer atmosphere can hold more water vapor and that heavy precipitation events will occur more frequently. According to the latest research, climate change can cause some low-pressure systems to stall and stay over a region, resulting in large amounts of precipitation over a relatively short period of time.”
With large reinsurance recoveries set to be made by the biggest insurers in the region, European reinsurance renewal rates are expected to come under pressure to rise at 1/1 2022.