European floods: Aon says economic loss very likely over $10bn

Economic losses from the recent severe flooding across Europe is likely to exceed US $10 billion according to insurance and reinsurance broker Aon, a figure we expect will end up being eclipsed once all the losses are counted across the impacted regions.

Flooding in Germany, photo from Christoph Reichwein – AFP

It’s another data point that shows the impacts of the devastating floods which impacted parts of central and western Europe this month, with Germany the country worst affected.

While a lot of the media coverage has therefore been focused on Germany, the impacts across Europe reached much more widely.

The cause was a slow-moving area of low pressure, named Bernd, which drove the catastrophic flooding across parts of Western and Central Europe from July 12th to 18th.

At least 209 people have been killed in various flood-related incidents and many more remain listed as missing after the tragic catastrophe.

In particular, record levels of rainfall on July 13th and 14th that resulted in several small and large tributaries of the northern and southern branches of the Rhine River overflowing.

Thousands of properties were inundated, as we explained yesterday it’s thought that minimally almost 72,000 buildings may have been impacted by the floods.

Germany was hardest hit, followed by Belgium. But insurance and reinsurance broker Aon noted that widespread flood- and storm-related damage was also reported in Switzerland, France, Luxembourg, United Kingdom, Austria, the Netherlands, Italy, Poland, Hungary, Slovakia, and the Czech Republic.

So the footprint of this event is particularly significant, beyond the very high water levels and devastation seen in parts of Germany and Belgium.

All of which suggests the economic cost to European nations will be particularly high.

Aon doesn’t make an attempt to estimate this, but says that it’s very likely the economic loss will be above US $10 billion.

That seems almost assured when you consider that in Germany just in the North Rhine-West­pha­lia and Rhi­ne­land-Pala­ti­nate regions, the insurance market is expected to take a loss of between EUR 4 billion and EUR 5 billion (close to US $6bn at the top-end, with more to come from the Saxony and Bavaria regions when estimates emerge for those areas of the country as well.

With flood insurance penetration in Germany reported to be around 46%, of properties having some level of flood coverage, it’s easy to see that the EUR 10 billion economic costs of this flood catastrophe could come from Germany alone, once the final bill is tallied.

Which means the Europe wide economic loss is likely to be far higher.

Aon comments, “A large portion of the damage is expected to be uninsured, however. The total economic loss from this event is very likely to exceed USD10 billion. This reinforces the importance of flood protection improvements, earlier warnings to vulnerable populations, adaptation to more amplified weather phenomena, and increased measures to lower the protection gap.

“This is a peril that does not frequently cause more than USD10 billion in economic damage, but there is notable precedent for large-scale, multi-national events that leave substantial impacts.”

Also read:

– Insured flood loss just in part of Germany said EUR 4 to 5 billion: GDV.

– ICEYE updates Europe flood data to minimum 71,859 buildings impacted.

– European flood losses may support reinsurance renewal prices: BofA.

– European flood industry loss seen up to US $3bn by Berenberg.

– European flood losses expected in the multiple billions of Euros: Aon.

– Europe floods won’t impact cat bonds, show need for protection: Plenum.

– Ongoing European flood event to drive industry losses in the billions.