Flood protection proposal – economy

Munich Re boss Joachim Wenning recommends that every building policy include protection against natural hazards. The customer who does not want it will have to deselect it.

The storm depression “Bernd”, which wreaked havoc in mid-July, will cost reinsurer Munich Re and its primary insurance subsidiary Ergo an “average triple figure”. This is what CEO Joachim Wenning said when presenting the current turnover figures. This includes damage caused by neighboring countries. The majority is made up of reinsurance, in which Munich Re covers other insurers, the much weaker part is represented by the subsidiary Ergo.

The General Association of the German Insurance Industry (GDV) estimates the insurance damage caused by “Bernd” in this country at 5.5 billion euros. However, this is only a fraction of the total damage suffered. Much of it is uninsured – this is also due to the fact that only 46 percent of homeowners have natural hazard insurance.

Until now, insurers have always opposed compulsory insurance to protect against natural hazards. Wenning pointed out that there was no ideal way to increase the diffusion of elemental coatings. “Otherwise you would be gone.” In order to avoid an obligation, but also not to wait any longer, Wenning advises a so-called opt-out solution: insurers should make this coverage a “natural component” in each building policy, customers should explicitly deselect protection.

If the state were to introduce compulsory insurance nonetheless, insurers could present it at individually calculated premiums, Wenning said. There should also be “negative incentives” for the construction of buildings in high risk areas. “If both are given, I can live with mandatory insurance as well as an opt-out solution,” Wenning said.

In the first half of the year, the group made a profit of 1.7 billion euros. “We have already reached 60% of our annual target,” said Chief Financial Officer Christoph Jurecka. For the year as a whole, the Dax group is aiming for a result of 2.8 billion euros.

However, the pandemic will continue to cost Munich Re dearly. Due to coronavirus-related deaths, particularly in the United States as well as South Africa and India, she now expects a burden of 400 million. euros this year, twice as much as expected.

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