Allianz calls for German state support for extreme nat cats

Germany’s leading insurer Allianz has weighed into the compulsory insurance debate sparked by the third major floods in Germany in the space of a few months. A compulsory insurance model alone, without more flood prevention initiatives, is “not a sensible alternative”, it said. “The solution does not lie in a single, isolated compulsory insurance,” said Klaus-Peter Röhler, member of the board of Allianz SE with responsibility for business in Germany. Instead, Allianz is calling for a more coherent approach that includes prevention and protection measures to adapt to the impact of changing climate as well as “risk-appropriate” insurance cover and government support for extreme nat cat events. “This is the only way we can break the spiral of increasing damage caused by extreme weather and rising premiums,” Röhler said. “We have to prepare ourselves for more frequent weather extremes. Compulsory insurance would not have prevented a single loss,” he said, arguing that such a system would remove buyers’ freedom of choice; a voluntary opt-out must always be available to policyholders, he said. Röhler further argued that damage to buildings can be prevented or reduced if the country raises social awareness and rolls out flood prevention measures, including higher and stronger dams, and introduces requirements for water-resilient building material. Allianz also backed GDV’s call for building bans in flood areas. Allianz said it expects the scale of damage to properties to increase in line with projections for more frequent and severe nat cat events. Rare cat scenarios that breach the capacity of insurers are now “conceivable”, Röhler said, and will require government intervention. With the GDV rejecting calls for a version of France’s nat cat system, Allianz’s Röhler said Switzerland offers an example of a working model. “Switzerland is successfully showing us how climate change adaptation, risk-appropriate offers from insurers and state support can be effectively combined in the form of a private partnership,” he said. “This is the only way we can break the spiral of increasing losses from climate risks and extreme weather and rising premiums in Germany.” Allianz has pledged €1m to rescue and relief efforts in southern Germany, which could double with employee donations and fund matching, and has set up a task force to settle claims. Lucie Bakker, chief claims officer at Allianz Versicherungs-AG, visited the affected region and said Allianz is mobilising its expertise to support policyholders. She said it is still too early to assess the extent of damage, but Allianz has sent 600 damage assessors to areas where waters have already receded. She said natural hazard cover in Germany, which is bought as an add-on to buildings and contents insurance, will cover policyholders for losses and is “possible and affordable” for almost all properties. “Almost 99% of all buildings are located in zones where the risk of flooding, backwater and heavy rain is very low to low,” she explained, but take-up remains low at about 54% nationally and lower at about 47% in Bavaria. “Without significantly greater efforts in preventive measures, the effects of climate change will not be able to be brought under control in the future. This is especially true in view of the catastrophic damage caused by heavy rain,” Bakker said, adding that government and local authorities need to invest to implement effective flood prevention measures. “Prevention begins with building and water laws that are adapted to the consequences of climate change, but also includes, for example, climate-adapted construction and flood protection for large rivers, as well as adapting the sewer system to heavy rain events by building suitable retention systems,” Bakker said.

Allianz calls for German state support for extreme nat cats

Rare weather scenarios that breach the capacity of insurers are now “conceivable” and will require government intervention

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