Floods in Germany and other parts of Europe last week and over the weekend could cost (re)insurers between $2bn and $3bn, according to analyst Berenberg. But while estimates are still being compiled in the immediate aftermath of the severe flooding, analysts agree that the event will make 2021 an expensive year for German insurers.
“We expect 2021 to be one of the worst years so far this century for German natural catastrophe claims,” said Fitch.
In a client note reported by Reuters, Berenberg said economic losses from the floods will be much higher than insured losses, with less than half of buildings in Germany insured for flood and heavy rain.
Berenberg named Allianz, AXA, Generali and Zurich as the most likely insurers to take the brunt of claims. It estimated a bill of between €200m and €300m for Allianz, between €200m and €250m for Generali, €140m for Zurich and about €100m for AXA.
Insured losses in Belgium from this month’s flooding will also be significant, with standard insurance policies including flood cover.
While firmer insured loss estimates are yet to be published, most analysts and industry experts agree that the floods in the German states of Rhineland Palatinate and North Rhine-Westphalia are some of the worst in its history, with losses from Belgium, Austria and Switzerland also heavy.
Fitch said insured losses “are likely to be Germany’s highest from a natural catastrophe event since widespread flooding in 2002”, which cost insurers €4.5bn gross of reinsurance. It estimates that German insurers’ net combined ratios could be five points higher this year from the recent flood losses. Fitch expects the sector to close 2021 with a combined ratio above the 94% originally forecast but still below 100%.
S&P said German insurers’ nat cat losses were already running high in 2021, with storms in June sitting at about €1.7bn in insured losses. Fitch said nat cat claims in Germany average about €3bn in a normal year.
S&P warned that German nat cat losses for the year could set a new high. “Insured natural catastrophe losses for the whole of 2021 could reach 2013’s high of more than €7bn and if they exceed €15bn, the gross combined ratio for the sector could rise to 109%,” said S&P credit analyst Johannes Bender.
Aon’s recent Global Catastrophe Recap report says insurers face a bill of $4.5bn from severe weather in Europe last month, which is set to end up being the costliest storm period ever in the region.
The German floods are likely to increase takeup of additional natural peril insurance, which is not standard in home insurance policies, S&P said. “We believe rising awareness of this topup cover might represent a business opportunity,” it said.
Both S&P and Fitch agreed that they are unlikely to change insurers’ ratings following the losses, with reinsurance protection in place and profits expected from other business lines.