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

The German insurance association, the GDV has said today that it estimates insurance market losses just for flood damage in the North Rhine-West­pha­lia and Rhi­ne­land-Pala­ti­nate regions will be between EUR 4 billion and EUR 5 billion.

Flooding in Germany, photo from Christoph Reichwein – AFP

This doesn’t include any losses from the damage experienced in the Saxony and Bavaria regions, the GDV explained, as it remains challenging to access certain areas and count losses.

This figure is far above where most industry observers had been expecting, with the majority of estimates so far having looked at a range of EUR 3 billion to EUR 5 billion for the impacts across the entire affected region of Europe.

With significant damage seen in Belgium, as well as other countries, this figure of an up to EUR 5 billion insurance and reinsurance market loss just for part of thee damage in Germany suggests the overall tally could be much higher.

“We currently expect insured losses of 4 to 5 billion euros,” explained Jörg Asmussen, chief executive of the German Insurance Association (GDV), in Berlin on Wednesday. “The damage is likely to be even higher than that of the August flood in 2002 of 4.65 billion euros. Low ‘Bernd’ is thus one of the most devastating storms in recent history.”

“Overall, this year with storms, flooding, heavy rain and hail is likely to be the most damaging year since 2002,” Asmussen added.

That year saw roughly EUR 10.9 billion of insurance and reinsurance market losses for storm damages in Germany.

“We are doing everything we can to help pragmatically and efficiently so that our customers’ claims can be processed quickly and without complications,” the GDV CEO further explained. Adding that, “My thoughts are with the people who have lost relatives and friends and those who fear for their belongings.”

These are big numbers for a European flood insured loss and once all other affected countries are counted as well, the toll will likely be much higher and could make this one of the most costly European flood events ever for the insurance and reinsurance market.

As we explained earlier today, data suggests that upwards of 43,400 properties and buildings will have been impacted by flooding across Europe, with a minimum 7,500 hit by high flood water levels across Europe.

We also explained this morning that at a EUR 5 billion industry loss, the flooding impacts could put upwards pressure on some reinsurance renewals in Europe.

Now, it’s clear that the loss will be well above that level when the total damages across Europe are counted, suggesting an even greater chance of upwards pricing pressure when the January 2022 renewals come.

The North Rhine-West­pha­lia and Rhi­ne­land-Pala­ti­nate regions included in the GDV’s first estimate are some of the most impacted areas from this flood disaster.

But significant impacts were seen more widely in Germany, as well as Belgium, Netherlands, Luxembourg, France and Austria, while Switzerland also saw some flooding as well.

It will likely be some time until we have more accurate figures for the entire Europe-wide industry loss from this event.

But, it is now clear that the major reinsurance firms will be taking a reasonable share of the loss, particularly the German headquartered giants, we’d imagine.

We’d also expect there to be some leakage of claims to certain ILS strategies or investors, perhaps even through the quota share sidecar market (at least through certain private collateralized reinsurance deals), given how far-reaching the ILS fund market is into most global markets these days.

It’s harder to say whether any retrocession arrangements could be impacted, as that will be dependent on how high the overall Europe-wide loss actually is.

Also read:

– Minimum 43,400 buildings impacted by European floods: ICEYE.

– 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.