It could be compulsory insurance

With insured damage of more than eight billion euros, the July flood was also the most expensive catastrophe of this kind in Germany: for German insurers, it resulted in losses of 12.7 billion euros from natural hazards in 2021. This is the result of figures from the insurance association GDV.

Floods or landslides are not included in the ordinary homeowners insurance that homeowners take out to protect themselves against storms, hail or lightning. According to figures from the insurance industry, around half of the 17 million homeowners also take out natural hazard protection.

Biesenbach said: “There is a large insurance gap here, which the state has to fill in with public funds in an emergency.”

According to Biesenbach’s will, this insurance gap would be closed with statutory compulsory insurance. In addition, there is a very small proportion of existing buildings which, because of their particularly vulnerable location, could only be insured for very high premiums. Biesenbach demands: “Here, too, the legislature must also offer a solution so that the owners of such buildings are not left alone without insurance cover against risks that could jeopardize the existence of their buildings.”

Constitutional concerns cleared?

Until now, constitutional concerns had prevented the introduction of compulsory insurance for natural hazards. At the initiative of North Rhine-Westphalia, the justice ministers have been examining again since last year whether an introduction “continues to oppose constitutional concerns or whether a different assessment is justified in the meantime based on the current data on climatic changes and on the insurance market”. The ministers will deal with the report that is now available at the forthcoming spring conference.

Critics complain that the life risk of a relatively small section of the population would be shifted to the entire insured community with compulsory insurance for natural hazards. It is possible for practically every owner to insure himself individually against corresponding natural hazards. The project would also mean a high administrative burden.

Experts assume that due to the climatic changes, flood disasters like the one in the Ahr Valley will occur more frequently in the future.

Such events are not limited to regions on water: “Flooding threatens everywhere,” said Theo Schmitt, scientist at the Technical University (TU) Kaiserslautern. “There is hardly a region in Germany that is safe from heavy rain and urban flash floods.”

More frequent flash floods in Germany

Schmitt is co-author of the new severe weather study “Heavy rain and urban flash floods – Agenda 2030” by the TU Kaiserslautern and the University of the Federal Armed Forces Munich, which was presented this Monday at the fair for environmental technologies in Munich. The study was commissioned by the “Responsibility for Water and the Environment” initiative. Behind this is the Federal Association of German Building Materials Specialists (BDB).

The scientists are convinced that in the future flash floods will befall Germany more and more frequently after heavy rain. A key reason for this is climate change. The consequences are fatal: billions in damage and loss of life.

>> Read here: Water management calls for a ban on construction in flood areas

The study expressly warns: “Heavy rain is enormously dangerous.” The speed at which water masses build up is a particularly critical factor: the surprise effect is a threatening problem that regularly overwhelms the population, but also the authorities.

In the case of heavy rain, there is no day-long advance warning, as is the case with floods in large rivers, which rise slowly and predictably. “The flash flood is coming from above – from now on. Without a dike, without protection,” says Wolfgang Günthert. He did research on flash floods at the Institute for Water Science at the Bundeswehr University in Munich.

failures in prevention

Nevertheless, the scientists see massive omissions, especially in rural districts, cities and municipalities: “Most – especially smaller – municipalities simply ignore the dangers that lie behind the growing risk of heavy rain. That’s negligent,” says Schmitt. His message: “Municipalities must be forced to do more prevention.” The federal and state governments should support the cities and municipalities in their fight against heavy rain, but at the same time make them responsible.

Specifically, Schmitt calls for cities and communities to be committed to heavy rain risk management. The municipalities would have to create hazard and risk maps in the future. “Such warning maps are created from a wealth of data: the topography with local green areas and the gradient is important. Likewise, of course, the meteorology.” In addition, the capacity of sewer systems is also crucial.

According to the scientists, the specific local risk of flooding must be determined street by street, house by house in order to be able to digitally simulate the effects of flash floods.

Such warning maps are also used as a basis for developing plans for dealing with rainwater in order to avoid bottlenecks in the sewer network. Project developers have long been planning districts where rainwater remains in the district for evaporation or for watering plants and only part of it flows into the sewer network.

>>Read here: The challenge of the municipalities – finally go digital

Homeowners also benefit from risk maps to identify weaknesses in their buildings and convert them, such as basement entrances and underground car park entrances. According to the funding, domestic drainage systems must be designed in such a way that waste water cannot penetrate the domestic drainage system.

The BDB called for homeowners and builders to be given more support in protecting their buildings against heavy rain: “The state must create incentives for new buildings and conversions,” says BDB President Katharina Metzger. The bottom line is that everything is cheaper in the long run than the enormous economic damage caused by the many floods.

In its sensational climate resolution of March 2021, the Federal Constitutional Court made it clear that the state not only has an obligation to enable compliance with the climate targets.

At the same time, he must take measures to mitigate the negative consequences of climate change: “It is also important here that, in order to protect fundamental rights from the dangers of climate change, additional protection through adaptation measures is in principle possible.”

Insurers and consumer advocates comment on compulsory insurance

Before the conference of justice ministers on June 1st and 2nd, the insurance industry and consumer advocates also commented on compulsory insurance against natural hazards. The Federation of Insureds (BdV) advocated a collective compulsory system to protect against natural hazards via a risk pool.

According to the BdV, a mandatory solution is needed that “continues to reward individuals for individual provision and at the same time makes the state binding,” said Rehmke. The consumer advocates therefore propose a collective mandatory system that the federal states provide together with the insurance industry as a pool solution.

The risk pool organized by the federal states is to be financed by a surcharge on the property tax, which is generally charged to all building owners. Those who can prove that they have private insurance for natural hazards are exempt from the tax.

Other associations had also commented on possible compulsory insurance over the past few months. The consumer advice center in Saxony, for example, spoke out in favor of compulsory insurance. The GDV suggested only offering fully integrated residential building insurance including natural hazards in new business.

Many insurers have already implemented this. At the same time, according to the GDV proposal, the existing policies should be expanded to include elementary protection. New and existing customers should also be able to deselect elementary protection (opt-out). But then they would have to do without help in the event of damage.

According to the GDV, the demand for natural hazard insurance, which increased noticeably after the flood disaster, has fallen again significantly. “We have often observed that many people feel the need to protect themselves immediately after a natural disaster,” said GDV General Manager Jörg Asmussen. “Unfortunately, as in this case, interest decreases again with increasing time since the event.”

More: Insurers pay record sums for natural damage.