The storm, which last week caused flooding especially in Germany, but also in Switzerland, Belgium, Luxembourg and the Netherlands, will cost insurers two to three billion euros. This is what the Berenberg investment bank assumes. The alliance is therefore the most affected. However, UK analysts did not include public insurance companies in their calculations. However, the Düsseldorf city center, which is active in North Rhine-Westphalia and northern Rhineland-Palatinate, and Versicherungskammer Bayern in Munich, with its business area in southern Rhineland-Palatinate, also face to substantial claim payments. Companies have traditionally been strong building insurers in their regions. It also means that your reinsurer, Deutsche Rück, has to deal with high losses. Actual claims expense could therefore be higher than the Berenberg Bank estimate.
The lower “Bernd” had devastated Rhineland-Palatinate and North Rhine-Westphalia, but also Bavaria and Saxony-Anhalt, with heavy rains. More than 160 people have died. Berenberg analysts estimate the damage in Germany alone at one to two billion euros. Unlike the flooding of the Elbe in 2002, which caused damage amounting to 4.5 billion euros insured at today’s prices, this time smaller towns and municipalities have been affected. . The 2013 floods are therefore better suited as a reference, they cost insurers 1.8 billion euros. This coincides with the assessment of the industry association GDV.
However, the economic damage will be much greater. In the case of comparable catastrophic floods, typically only 20-25% of total damage was insured. This is also due to the fact that only 46 percent of buildings in Germany have flood coverage.
At Allianz, Berenberg analysts expect a net charge of 250 million euros. The Munich-based company has a market share of around 13% in the affected Länder of Rhineland-Palatinate and North Rhine-Westphalia. Next come Generali (225 million euros), Axa (110 million euros) and Zurich (106 million euros). According to analysts, Talanx will only have to pay around 40 million euros. Ageas, Helvetia and Bâloise are also invited to pay.
Home insurance already in deficit risks sinking even deeper into the red. Although suppliers have raised prices in recent years and canceled customers with high complaints, the complaints-to-expense ratio averaged 106% between 2000 and 2019, according to Cologne rating agency Assekurata. This means that insurers had to pay 1.06 euro for each euro of premiums to pay for damage as well as administration and selling costs. They can hardly compensate for this technical loss with investment income because of the low interest rates. Home insurance, on the other hand, is a stable source of profit.
Last year has gone well for insurers – also because there has been little damage from the crown. But in 2021 the balance sheets will be ruined. In June, risk takers had already paid 1.7 billion euros for the damage caused by the storm. “We are going to see significant technical losses,” said Assekurata boss Reiner Will.
Suppliers could therefore turn the price screw again. “It won’t be the first reaction from insurers, but they will see if this is a one-time event or a trend,” says Will. “In the medium term, there could be an impact on the premium.” In addition, the industry will take advantage of the storm to advertise intensively to its customers to take out additional insurance against natural hazards.