Insurance firms in Germany overseeing flood-related restoration efforts.
The July floods in Germany have left a significant impact on the country, with damages totalling an estimated 1.3 billion euros. The majority of these damages occurred in the commercial and industrial sector, particularly in buildings, machinery, and equipment.
The German insurance industry is facing financial consequences due to these flood damages. The primary insurers currently expect a damage of up to around 8.2 billion euros gross from the July flood. This makes it the largest natural hazard loss ever recorded by German insurers.
Around 6.3 billion euros of this damage is reinsured. The maximum net burden for German reinsurers is around 1 billion euros, with the rest of the sum distributed across numerous other insurance branches such as storm and business interruption insurance.
The maximum net damage burden for household contents insurance is around 0.2 billion euros, while for motor vehicle liability insurance, it is also around 0.2 billion euros. The maximum net damage burden for residential building insurance is around 0.9 billion euros.
It's important to note that only about half of the buildings in Germany are insured against heavy rain and flooding. This means that a significant portion of the damages might not be covered by insurance.
The Federal Financial Supervisory Authority (Bafin) has asked insurance companies affected by the July flood disaster for the worst-case scenario for their damage burden. German reinsurers surveyed by Bafin currently expect a gross damage burden of around 4 billion euros at most.
The July Flood has caused approximately 400 major damages, making it the most damaging natural disaster in Germany. This surpasses the previous record held by the August flooding in 2002, which caused 102 major damages and a total of 701.6 million euros.
The flood in June 2013 caused 75 major damages totaling 218.9 million euros. There were several insured damages exceeding 20 million euros, such as in the hotel industry, chemical production, and metal processing.
Despite the significant damages, no signs of any threat to the existence of primary or reinsurers have been observed. Bafin executive director Frank Grund reassures that while the coverage ratio decreases for many companies, it's only slightly for most.
This overview provides a glimpse into the extensive damages caused by the July floods in Germany and the financial implications for the insurance industry. As the situation continues to unfold, it is crucial for the industry to work together to mitigate the impact and provide support to those affected.
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