Insurers to foot massive bill for severe flooding in Europe
Catastrophe risk modeller RMS has estimated the insured losses from the severe flooding that wreaked havoc across Western and Central Europe in mid-July (12-18) this year. The event, which affected countries including Germany, Belgium, Luxembourg, France, Netherlands, Switzerland, Italy, and Austria, is said to be comparable to the "costliest" European flood events in recent history.
The risk solutions company reconstructed a flood hazard footprint that covers the worst affected areas, including western and southern Germany, eastern Belgium, eastern France and Luxembourg. It estimates that the total insured losses for these regions will likely be in the range of €5 billion to €6.5 billion ($6 billion and $7.7 billion).
The estimate excludes losses observed in the Netherlands, which sits outside of the model domain, and losses in Switzerland, Bavaria and Saxony in Germany, and Austria, which were caused outside the time window of the heaviest rainfall.
RMS said Germany is the dominant contributor of loss (between €3.5 billion and €4.5 billion) to the event with about 70 percent of the total loss, followed by Belgium with about 25 percent of the loss.
The loss estimate was calculated through an analysis of the new flood footprint functionality in the RMS Europe Inland Flood HD Models running on Risk Modeler. The new flood footprint functionality allows users to run the footprint on their own exposure to obtain a granular bespoke loss estimate.
The loss estimate includes insured property and business interruption loss to residential, commercial, industrial, automobile, and infrastructure lines and accounts for the potential of post-event loss amplification and extended business interruption.
Daniel Bernet, product manager, Europe Flood Models, RMS, said: “In terms of loss, this event is expected to be comparable to the costliest European flood events in recent history, the Central and Eastern Europe floods of 2002 and 2013. However, unlike the 2002 and 2013 events during which overtopping and breaching of major rivers contributed substantially to overall damages, the 2021 event occurred in a different region and was characterized with much steeper and faster flood waves with higher flow velocities in smaller rivers and tributaries that caused substantial structural damage, and regretfully, an unusually high number of fatalities.”
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