Frankfurt, Munich Almost two years after the devastating flood disaster in the Ahr valley, the discussion about comprehensive insurance protection for property owners is gaining new impetus. On Friday, the federal states called on the federal government via the Bundesrat to initiate the appropriate steps towards comprehensive compulsory insurance against natural disasters.
The insurers themselves have now made further progress: in new business, most insurance companies only offer policies with elementary protection. What seems like anticipatory obedience has tangible economic reasons – because natural hazard protection is also an additional business.
In addition to the human tragedies, the flood in the Ahr Valley caused extensive damage to bridges, roads and, above all, houses. Many of them were uninsured.
Because while most residential buildings are insured against damage caused by fire, lightning, storms, hail, mains water and overvoltage, only around half of private building owners have natural hazard insurance.
So far, it has usually been offered as an additional component to residential building insurance and covers damage caused by heavy rain, flooding and backwater.
disagreement in politics
Since then, politicians have been discussing the introduction of compulsory insurance for natural hazards. After the debate had stalled at the turn of the year, Baden-Württemberg and North Rhine-Westphalia made a new push for nationwide compulsory insurance in March.
On Friday, North Rhine-Westphalia’s Prime Minister Hendrik Wüst announced in the Bundesrat that the Prime Ministers of the federal states agreed that nationwide compulsory insurance for natural hazards should come. It is now up to the government to address the issue. However, the FDP in the Bundestag immediately rejected compulsory insurance for natural hazards, citing the fear of increased housing costs as the reason.
The insurers themselves are against compulsory insurance. Jörg Asmussen, General Manager of the industry association GDV, emphasizes that customers should be free to decide whether and how they are insured.
The GDV advocates that insurers automatically offer elementary protection, so that customers have to actively deselect it (opt-out). At the same time, Asmussen calls for an overall package of preventive measures, for example in building law, climate change adaptation and insurance protection. This is a prerequisite for affordable insurance protection in the future.
But while discussions are still being held elsewhere, most insurers have already reacted. In new business, they only offer policies with elementary protection.
Example Huk-Coburg: Since autumn last year, Upper Franconia has concluded around 40,000 new contracts for residential real estate, three quarters of them with comprehensive protection against natural disasters.
The other customers deliberately opted out of comprehensive protection. But unlike in the past, this group now receives the elementary protection basic from Huk, with which the deductible is a maximum of 100,000 euros even if the house is completely damaged. With a minimum security, the existence is not completely threatened in the worst case. In the past, customers had to bear the entire loss.
Other providers have similar models. At Ergo, elementary protection in new business is also preselected in the application process. In addition, the Düsseldorf-based company also makes offers in high-risk areas. This was also often different in the industry in the past, when homeowners in these areas no longer received any insurance offers.
Zoning system shows particularly endangered areas
With the ZÜRS Geo zoning system, insurers have been able to identify where in the country real estate is particularly at risk from flooding or heavy rain for years. Of the approximately 22 million addresses in the country, only 0.4 percent are in the highest danger zone, which threatens flooding at least once every ten years.
The cooperative R+V recently developed the new “Natural Hazards Plus” module. In addition to flooding, landslides or snow pressure, damage caused by heavy rain and backwater is also comprehensively insured. In new business, 80 percent of contracts now include protection against natural hazards. At 70 percent, the entire portfolio is above the national average, according to which every second building is comprehensively insured.
However, the fact that the industry itself became active after the disaster in the Ahr Valley is also due to tangible self-interests. On the one hand, the insurance companies want to avert a possible general insurance obligation.
On the other hand, natural hazard protection means additional business – albeit not an easy one. Due to rising construction costs and craftsman prices, it has not been easy for insurers to work profitably in residential building insurance for years.
Special case Baden-Württemberg
A historical special case is Baden-Württemberg. At SV Sparkassen Versicherung, which is on the market there as well as in Hesse and Thuringia, it is said that around 70 percent of customers already have complete elementary protection with home building insurance.
Approximately
130
Euro
more per year is the cost of element protection for a single-family home in the lowest risk category. But it can also be significantly more expensive.
In Baden-Württemberg, where insurance was compulsory until 1994, it is almost 100 percent. There, the SV has always only offered policies with complete elementary protection. In Thuringia it is offered, but customers can opt out.
Because one thing cannot be denied: With the comprehensive insurance protection against natural hazards, the costs for the insurance premiums increase for homeowners. In contrast to residential building insurance without elemental protection, the costs with this module for an average single-family house in the lowest ZÜRS category are around 130 euros higher per year, according to the Versicherungskammer Bayern. Although this is only a guideline: depending on the size, equipment and location in the respective ZÜRS zone, it can also be significantly more.
But time is already pressing. The reinsurer Swiss Re has just confirmed the trend according to which insured losses from natural catastrophes have risen by five to seven percent per year over the past three decades. With the beginning of spring, severe storms tend to increase in Germany as well.
In practice, however, insurers encounter the usual pattern after major catastrophes. Immediately after the Bernd storm, the demand for comprehensive insurance cover was high, according to the LVM in Münster. A year later, however, she was no longer so dynamic. A trend that other insurers confirm. The insurance chamber therefore even speaks of “flood dementia”.
More: Countries require nationwide compulsory insurance for natural hazards.