Fitch Ratings Estimate German Flood Claims at €1 Billion

Insurance claims linked to the recent flooding in Germany are likely to reach about €1 billion, Fitch Ratings says, adding that claims on this scale would weaken underwriting profitability for the sector, but would be unlikely to threaten credit profiles.

Two deadly floods events struck in Germany between 29 May and 02 June 2016. Six people died in the district of Rottal-Inn, Bavaria after rivers overflowed. Parts of the Altbach and Inn rivers both reach reocrd levels. Earlier three people died after floods in the neighbouring state of Baden-Württemberg.

Homeowners and Motor Insurance Sectors Feel Biggest Impact

According to Fitch, most claims are likely to be on homeowners’, contents and motor insurance policies as well as, to a lesser extent, business interruption insurance.

Fitch says that “Insurers with high market shares in the homeowners’ and motor sectors are likely to see the biggest impact. These include public-sector insurers, especially Versicherungskammer Bayern and SV SparkassenVersicherung, which are active in the hardest-hit regions.”

Fitch adds that “insured losses of €1 billion would be equivalent to the entire expected natural catastrophe losses that are factored into our 2016 forecasts, although excess-of-loss reinsurance cover will cushion the impact.”

Uninsured Losses

The €1 billion estimate is for insured losses. Fitch says that economic losses are likely to be high because only around a third of home insurance policies in Germany include natural hazard cover. Residents in areas prone to flooding often do not have natural hazard cover because it is unavailable or very costly. However, much of the recent flooding has been caused by extreme local rainfall in areas that have not been considered at high risk of flooding, meaning that insurance would have been cheaper and easier to obtain. The proportion of homes covered could therefore be higher than in the last major German floods in 2013.

June Floods in Europe to Cost €2.4 billion

The cost of the German floods bring the estimated insured losses for the recent floods in Europe to around €2.4 billion.

Yesterday, the Association Française de l’assurance (AFA) said that 77,000 insurance claims have already resulted from the recent floods in France and that the French insurance industry expect this figure to rise to around 150,000.

In a statement yesterday, AFA said that the total amount of the insured losses is currently estimated at between €900 million and €1.4 billion.

Flood Summary

Last updated: July 4, 2016
Event
Bavaria, Germany, June 2016
Date
June 1 to June 3, 2016
Type
Flash flood, River flood
Cause
Extreme rainfall
Floods struck in district of Rottal-Inn, Bavaria, where rivers overflowed, leaving towns devastated and at least 6 people dead.

Locations

A - Simbach am Inn
B - Triftern

Magnitude

River level
3.45 metres
Altbach River level at Triftern - June 1 to June 1, 2016
River level
4.80 metres
Inn River level at Simbach am Inn - June 1 to June 1, 2016

Damages

Fatalities
6 people
Rottal-Inn District

Flood Summary

Last updated: July 4, 2016
Event
Baden-Württemberg, Germany, May 2016
Date
May 29 to May 31, 2016
Type
Inland flood, River flood
Cause
Extreme rainfall
A storm and heavy rain that began late 29 May 2016 caused flooding in parts of southern Baden-Württemberg, Germany, leaving 3 people dead.

Locations

A - Schwäbisch Hall
B - Schwäbisch Gmünd
C - Weißbach

Magnitude

Rainfall level
93 mm in 24 hours
Kirchberg - May 29 to May 30, 2016
Most of the rain fell in the space of 12 hours.

Damages

Fatalities
2 people
Schwäbisch Gmünd
Fatalities
1 person
Weißbach