South Germany flood insured losses estimated up to US $3.9bn: Verisk

Verisk’s Extreme Event Solutions risk modelling business has estimated that the recent flooding in southern Germany will drive insurance industry losses in a range from US $2.6 billion to $3.9 billion.

Verisk’s first estimate for these recent floods is higher than the one from Moody’s (RMS), which had put an upper-limit to its insurance market loss estimate of US $3.2 billion.

Verisk’s estimate for industry insured flood losses covers the period May 15th to June 5th, where Moody’s estimate was for the period May 30th to June 3rd, so there are some differences in how many claims will be captured as a result, which makes comparison a challenge.

However, Verisk noted that, “Between Friday, May 31 at noon CET and Monday, June 3 at noon CET, 120 to 160 liters of rain fell per square meter across southern Germany, which is more than what usually falls in a month, according to Sebastian Altnau, a meteorologist with the German Weather Office.”

Which might also suggest that cutting off the estimate too early could miss some of the losses.

Verisk’s full financial estimate for insured losses ranges EUR 2.4 billion (USD 2.6 billion) to EUR 3.6 billion (USD 3.9 billion).

The company said that, included in its insured loss estimate are: insured physical damage to property (residential, commercial, industrial, auto, agriculture), both structures and their contents, from both on- and off-floodplain flooding. Also included are additional living expenses (ALE) for residential claims and business interruption (BI) for commercial claims.

Like the Moody’s RMS estimate, it does not include any losses outside of Germany.

As we stated in our earlier report, the majority of the losses from the flooding in Germany is expected to fall to insurers, although a small amount could flow to reinsurance capital through quota share arrangements and the like.

It still feels like the loss may need to creep to the upper-end, or higher, of the current estimates, for the major reinsurers sidecar arrangements to be meaningfully impaired in a way that would concern their investors. Some attritional claims leakage to sidecars is possible, but it would likely be very minimal at this stage.

Also read:

– German insured flood losses estimated up to US $3.2bn: Moody’s RMS.

– Germany flooding to drive around €2bn insurance market loss: GDV.