AIR puts insured losses from German floods at up to EUR 5.8 Billion ...

Risk modelling firm AIR Worldwide has released an estimate for insured losses in Germany resulting from the recent flooding events across Central Europe. AIR estimates insured losses in Germany to be between ?4 billion and ?5.8 billion, that?s up to $7.7 billion in USD. The flood event is ongoing so any insured loss estimates could rise.

The overall economic loss impact from the floods is expected to be much higher due to low take up of flood cover in some affected regions.

?An extraordinarily wet May and several days of heavy and relentless rainfall in June have resulted in the worst flooding to hit parts of central Europe in many years,? commented Yorn Tatge, managing director of AIR Worldwide GmbH. ?Germany, Austria, and the Czech Republic have suffered the brunt of the flooding, the worst since the Elbe flood of 2002,?but Switzerland, Hungary, Slovakia, and Poland have also been affected.?

AIR?s estimate is higher than the one issued by Fitch, who said German insured flood losses could reach ?3 billion. AIR said that the 2002 river Elbe floods, which affected a smaller area than this years event, would cause approximately ?5 billion in insured losses or more at todays values accounting for changes in flood insurance penetration and the growth in stock and values of buildings.

Tatge added; ?Floodwaters hit Germany hardest, particularly the east and south German states of Thuringia, Saxony, Saxony-Anhalt, Lower-Saxony, and Bavaria. Several levees along the Elbe River near Magdeburg, the capital of Saxony-Anhalt state, were breached or in danger of a breach as flood water rose more than 16 feet above normal. In Passau, located at the intersection of the Danube, Inn, and Ilz rivers, floodwaters hit their highest level since 1501, while the Saale River in Halle, Germany, reached its highest level in its 400 years of record keeping.?

So this is the insured loss estimate for Germany alone, so not including Austria, the Czech Republic or Hungary, which were all badly impacted by these floods. The event as a whole looks set to outstrip the insured losses from the 2002 flood event, however the impact to the insurance and reinsurance sector will be manageable as capitalisation and reinsurance protection levels are improved.

Some insurance-linked investments may be affected if they covered flood within Germany. We know of at least one ILS fund manager with exposure to flood risks through reinsurance contracts it has collateralized, however if there are any losses at all they are expected to be minimal to these investments.

Tagged as: capital markets, europe, flood cat bond, flood catastrophe bond, insured losses, reinsurance

Source: http://www.artemis.bm/blog/2013/06/20/air-puts-insured-losses-from-german-floods-at-up-to-eur-5-8-billion/

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