Austrian insurers call for government action on nat cat risk

The Austrian government needs to take the impact of climate change more seriously and work in partnership with the insurance sector to develop more effective risk management and transfer options to combat the threat, says Dr Othmar Ederer, vice-president of the Austrian insurance association, the VVO. The VVO points out in a recent note that climate change means extreme weather events are increasing dramatically. “The urgency of an insurance solution against natural hazards could not be higher,” it states. “Climate change is evident, extreme weather events are increasing rapidly. The Austrian population is increasingly confronted with the consequences of extreme weather events. Headlines such as ‘Heatwave reaches its peak’ or ‘Heat record in Austria is broken’ reach us almost daily in the media,” says the VVO. The association believes that these risks are still “greatly underestimated” despite their fast-rising impact on the central Europe region. “Not only individual regions are at risk, but all federal states. Unfortunately, these are no longer annual phenomena, rather a long-term trend in the increase in extreme weather events can be clearly identified,” explains the VVO. The main natural catastrophe threats to Austria are storms, floods, snow and hail, heatwaves and earthquakes. The VVO points out that the Austrian insurance industry has stressed for many years that comprehensive insurance for natural hazards is only possible if politicians also make their contribution. It says Austrian insurance companies are well prepared to handle damage from extreme weather events “quickly and competently”. However, further political steps are “urgently needed” to deliver the right legal framework and guarantee these natural hazards are insurable, argues the VVO. “Only a joint solution can insure against natural hazards. Politicians must ensure that there are suitable legal provisions that allow Austrian insurers to spread their risk accordingly. Then insurance products against natural hazards can be offered at a price that the customer can afford,” it says. Dr Ederer concludes: “This could be achieved, for example, through the legally mandatory integration of natural catastrophe coverage into existing fire insurance – as in Belgium, for example. On the other hand, each individual is also required [to manage their individual risks]. The better the preventive measures are, the lower the extent of damage in individual cases,” he says. The challenge facing Austria, a mountainous country with a high proportion of waterways and therefore high flood risk, is huge. The flood risk problem really came to light in August 2002 when Austria, among many other European countries, was hit by severe flooding described as the “flood of the century”. Heavy rainfall in Salzburg and many parts of the country caused several billion euros worth of damage. In total, it affected more than 60,000 people, which caused the government to invest €650m in direct aid to flood victims, businesses, towns and villages. The government also created a national catastrophe fund to finance large-scale protection infrastructure and compensate private households for damages caused by floods. According to experts, however, this fund is actually part of the problem because it is one of the main reasons why Austria has such a low level of flood insurance penetration compared with other less-exposed European nations. They also point out that the fund doesn’t necessarily help promote loss-prevention action.

Austrian insurers call for government action on nat cat risk

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