German insurance industry association the GDV has said today that it expects insurers will face at least $510m (EUR450m) of losses due to storm Elvira’s impacts which struck the country from the 27th to 30th May.
The estimate from the GDV (or Gesamtverband der Deutschen Versicherungswirtschaft) does not include impacts caused by storm Elvira and other outbreaks of severe weather which struck on the following day.
So this initial estimate is perhaps just a small slice of the losses that German insurance firms, and likely some reinsurance firms, will have to pay.
The estimate, which the GDV notes is preliminary, includes damage to residential property and contents, businesses and physical damage to autos, with damage particularly concentrated in Germany around the Baden-Wuerttemberg region.
That region has particularly high insurance penetration, the GDV explained, however the other regions hit in subsequent days, such as Lower Bavaria and North Rhine-Westphalia, also have reasonably high insurance coverage for properties and damages suffered there are not included in the estimate.
Storm Elvira, a summer convective style European storm, brought severe thunderstorms, hailstorms, widespread torrential rains and resulted in flash flooding as well, with the period of the 27th to the 30th May 2016 seeing southern Germany particularly hard hit.
In the last few days storms have continued in the region, along with further flooding, suggesting that the final toll for insurance and reinsurance to pay for will likely be much higher. More than 10 10 people were killed in flooding over the last week in Germany, with Sunday and Monday seeing particularly bad inundations.
So far the insurance industry loss from this storm Elvira does not seem to be anywhere near as high as was seen with storm Ela in 2014. Storm Ela in 2014 caused some small ILS fund impacts and losses to collateralized reinsurance contracts covering major insurers.
So far the events in 2016 don’t seem that severe yet, but with the prospects that flooding could continue, losses to come in from France or other countries, and with much of the summer left to run, any further severe thunderstorms, hail and floods could eat further into aggregate reinsurance contracts, raising the prospects of losses spreading beyond the traditional and into the alternative reinsurance or ILS world.
However, forecasts suggest that the rainfall and storms are likely to continue to affect the region, and with France seeing widespread flooding including in Paris itself, Belgium also affected and Prague in the Czech Republic, while this severe weather pattern continues the potential for insurance and reinsurance losses keeps rising.
A large area of low pressure remains almost stationary across a swathe of the affected countries and warm, humid air coming up from the Mediterranean south is interacting with it and causing the significant rainfall levels. With more rain forecast through the coming days the floodwaters may not yet have peaked.
However, in the German losses it seems that it is localised torrential downpours and resulting flash flooding that are causing significant proportions of losses. While this weather pattern remains over Europe the prospect of further flash flooding cannot be discounted.