Analysts at Aon have warned that “a large portion of the damage” from the recent catastrophic flooding in Europe will be uninsured, even as re/insurers brace for a multi-billion-dollar loss overall.
Last week’s flooding impacted many parts of Central and Western Europe, including Belgium, the Netherlands, and Switzerland, although Germany remains the worst affected.
The event is poised to become one of the costliest flood episodes on record, and comes on the back of costly storm conditions through June.
Aon stressed that it remains too early to provide a specific financial loss estimate, but said it’s “highly likely” that both the overall economic and insured loss will each be measured in multiple billions.
But German Insurance Association (GDV) shows that 54% of properties in Germany lack any insurance coverage against weather phenomena, meaning the economic loss could be far higher than the insurance industry bill.
This reinforces the importance of flood protection improvements, Aon says, as well as earlier warnings to vulnerable populations, adaptation to more amplified weather phenomena, and increased measures to lower the protection gap.
In Germany, the worst impacts from the flooding were recorded in the Rheinland-Pfalz and Nordrhein-Westfalen regions of the west, where there were at least 165 confirmed fatalities, and dozens more still missing.
Floodwaters were high enough to completely submerge the streets of some towns, which has caused widespread damage to homes, as well as sweeping away vehicles, bridges and other infrastructure.
And authorities believe the Steinbachtal dam remains at risk of breaching after residents were evacuated from homes downstream.
All this follows on from a prolonged stretch of severe weather through the latter half of June, as storms racked up an insured bill that could reach $4.5 billion, according to Aon.
Weather conditions in June included thunderstorms, hail and even a tornado that hit the Czech Republic, with Germany, France, Belgium, the Netherlands and Switzerland again among those that were heavily impacted.
Ernst Rauch, Chief Climate and Geo Scientist at Munich Re, has said that events such as the recent flooding in Germany are “very likely related to climate change,” and are set to grow in both frequency and intensity.
While Aon did not draw a direct line of causation to climate change, it did note that the volume of rainfall is consistent with what scientific research has shown as expected with the continued warming of the atmosphere and oceans.
“In terms of the specific July 12-18 event, while climate change was not the direct cause of this event, it is another example of how more unusual heavy precipitation occurrences or stalled weather patterns are becoming more commonplace in a warming world,” analysts stated.
“Another result of a warming atmosphere and oceans is more peculiar behavior of water patterns that can affect the jet stream. With the prospect of more instances of weakened atmospheric circulation and subsequently weaker steering currents, this does increase the probability of extreme rainfall events that can subsequently result in major flooding.”