Insurance and reinsurance market losses from July’s severe flooding in Germany are now expected to reach as high as €7 billion (around US $8.3bn), according to the chief of the country’s insurance association.
This is a reasonably significant increase from the previous insurance market loss estimate of near to €5.5 billion.
This week, general manager of the German Insurance Association (GDV), Jörg Asmussen, said that “We are now expecting insurance losses of around seven billion euros.”
Around €6.5 billion of the insurance market losses are expected from damage to residential buildings, household items and businesses, with another around €450 million from damage to motor vehicles.
The assumption is that there will be around a quarter of a million insurance claims from the severe flooding event that struck Germany’s North Rhine-Westphalia, Rhineland-Palatinate, and Bavaria and Saxony regions, from July 13th to 18th.
This flood event is now the most damaging natural disaster in German history, making for a particularly costly year for local insurers and those providing reinsurance capital to them.
“Together with the high hail damage in early summer, it is becoming apparent that 2021 will be one of the most expensive natural hazard years ever for insurers,” Asmussen said.
Previously, Germany financial regulator BAFIN estimated the insured loss tally from the floods at €5.7 billion, around €1 billion of which it expects will fall to reinsurance firms from Germany.
As we previously explained, these flood losses across Germany and other parts of Europe, as well as other severe weather events this summer, may be supportive of reinsurance pricing at the key January 2022 renewal season.
With damage experienced in a number of other countries, it is now looking like the ultimate insurance market loss from these floods could approach the US $10 billion mark.
We also wrote this week, that some ILS funds see the European floods as a possible threat to certain aggregate ILS contract deductibles.
This new estimate from Germany’s insurance association also makes loss estimates from some of the main catastrophe risk modelling firms look a bit low, so we could see some of these updated in the coming weeks and the industry may need to increase reserves if they have been working off cat model outputs.