The July floods in Germany, Luxembourg, the Netherlands and Belgium, as well as the fires in Greece, are set to drive up insurance prices, according to German reinsurer Munich Re.
A phenomenon of price catch-up
German reinsurer Munich Re has estimated the cost to its own accounts of the floods in Europe in July at around 500 million euros. According to Christoph Jurecka, Munich Re's Chief Financial Officer, these natural disasters will lead to a catch-up in prices and an increase in insurance rates on the Old Continent.
According to research firm Catastrophe Insight, the floods that ravaged parts of Belgium, Germany, the Netherlands and Luxembourg cost insurers between 6 and 7 billion euros.
For several years now, the European insurance market has stood out for the stability of its rates, in contrast to the United States, which is more accustomed to natural disasters. But in 2021, extreme events have multiplied, and the latest report from the Intergovernmental Panel on Climate Change (IPCC) is very clear: in the absence of radical action to combat climate disruption, natural disasters will become increasingly frequent in the years to come.
2021, one of the most expensive years for insurers
The floods of July were unfortunately not the only natural disasters to hit Europe in 2021. A historic spring drought created the conditions for the terrible fires that are still raging in Greece, where 100,000 hectares went up in smoke in the space of two weeks.
For Catastrophe Insight managing director Steve Bowen, the year 2021 is already shaping up to be one of the most costly for insurers on the Old Continent, with insured losses approaching $15 billion. Almost half of this sum is due to the July floods.
Annual losses of this magnitude have not been recorded since the 1990s, and more specifically 1990 and 1999, when storms Daria, Lothar and Martin caused major damage on the continent. What's more, 2021 is still far from over, and the bill could be even higher should winter storms strike.
Faced with the increase in these extreme phenomena, some insurers are already refusing to cover certain risks, or are developing specific products to cover a particular risk. These uninsured risks are partly covered by certain governments, as is the case in France with the natural disaster compensation scheme set up in 1982.