As early as June 2022, the Prime Ministers’ Conference had spoken out in favor of introducing compulsory insurance for natural hazards. In December, however, Federal Minister of Justice Marco Buschmann (FDP) rejected the project.
(Photo: dpa)
Berlin As part of a Federal Council initiative, North Rhine-Westphalia and Baden-Württemberg want to introduce mandatory nationwide natural hazard insurance for building owners.
“Instead of spontaneous state ad hoc aid, there must be long-term risk prevention through compulsory insurance for natural hazards,” says the joint motion for a resolution, which was approved by the NRW state cabinet on Tuesday and is now being forwarded to the Bundesrat. The application has been submitted to the Handelsblatt.
The application goes on to say that systematic measures are needed “so that no one has to face financial ruin after a flood disaster or other major damage events”. The past months and years have shown that extreme weather events are occurring more and more frequently.
The specific reason for the debate is the disaster in summer 2021, in which heavy rain and flooding in North Rhine-Westphalia and Rhineland-Palatinate as well as parts of Bavaria, Baden-Württemberg and Saxony killed numerous people and caused extensive damage to residential and commercial properties.
At the beginning of the week, the Federal Ministry of Economics presented a study on the potential damage caused by climate change. The experts reckon with economic damage of between 280 and 900 billion euros for Germany between 2022 and 2050.
Only half of homeowners are insured
According to the insurance industry, only around half of private building owners have natural hazard insurance. With such a policy you can protect yourself against damage caused by storms, hail, floods, earthquakes, avalanches, snow pressure and volcanic eruptions.
NRW Prime Minister Hendrik Wüst (CDU) told the Handelsblatt: “There is an urgent need for action.” It shouldn’t be that the topic is only on the agenda immediately after a disaster and then forgotten.
The Prime Minister of North Rhine-Westphalia calls for compulsory insurance for natural hazards.
(Photo: dpa)
“The states are therefore in agreement: The nationwide compulsory insurance for natural hazards must come,” said Wüst.
As early as June 2022, the Prime Ministers’ Conference had spoken out in favor of introducing compulsory insurance for natural hazards. In December, however, Federal Minister of Justice Marco Buschmann (FDP) rejected the project. He considered nationwide compulsory insurance politically “wrong”.
It is inappropriate to impose even more costs on homeowners. However, Buschmann had given the states the freedom to create their own regulations.
Immediately afterwards, however, parts of the federal government referred to further consultations on the matter, such as the Ministry of Consumer Protection.
Immense costs for federal and state governments
NRW head of state Wüst said: “We already received a commitment from the Federal Chancellor in June 2022 to tackle the issue. But to date, the federal government has not presented any viable solutions.”
So now the Federal Council initiative should push things forward. The federal government is to be requested by application to “quickly develop a concrete federal regulation proposal” for the introduction of compulsory insurance against natural hazards. “Disasters do not stop at national borders,” says the motion.
When designing compulsory insurance, the financial expense for private households should be kept “within reasonable limits”.
The Baden-Württemberg Prime Minister Winfried Kretschmann (Greens) told the Handelsblatt: “We finally have to make progress on this important issue.” Storms did not wait for politicians. “Each further event brings high damage and immense financial follow-up costs for the federal and state governments.”
Without nationwide compulsory solidarity insurance, the state would not be able to cope with this in the long term. “A specific federal regulation proposal is therefore overdue,” explained Kretschmann.
Owners suppress danger
According to the General Association of the German Insurance Industry (GDV), heavy rain, flooding or landslides only have short-term effects on building owners. “Immediately after a natural disaster, people feel the need to protect themselves,” GDV CEO Jörg Asmussen told Handelsblatt. Unfortunately, however, the interest “with increasing time interval to the event” decreases again.
After the 2021 flood, insurers registered around 400,000 new elementary damage insurance policies for residential buildings – four times more than usual in a quarter.
Asmussen refers to a study by the Swiss reinsurer Swiss Re, according to which weather-related catastrophe losses in Germany will increase by 90 percent by 2040. “The economic damage of the future due to climate change and extreme weather events can only be reduced through climate-adapted construction,” says Asmussen. “Prevention and adaptation to the consequences of climate change are the linchpin so that damage caused by natural disasters and thus insurance premiums do not get out of hand financially.”
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