French insurers tackle rising household drought claims

The French insurance sector has launched an initiative to tackle the rising problem of damage caused by drought to private homes in the country, a problem that affects over half of all detached houses in the country. It is thought that 11.1 million French homes could be affected, with 3.3 million potentially experiencing significant impacts. The cost of claims in this area has increased almost tenfold over the last 30 years. The effort – Initiative Sécheresse – was launched by the national insurance association France Assureurs, the state-backed reinsurer CCR and Mission Risques Naturels (MRN), the association created in 2000 by the insurance sector to help tackle natural hazards. This initiative has been synchronised with the offices of Bruno Le Maire, French minister for the economy, finance, and industrial and digital sovereignty, who helped introduce France’s new captive-friendly measures in cooperation with French risk and insurance management association Amrae. Risk managers across Europe are calling for a more joined-up approach to build resilience through the increased use of public private partnerships in the face of major systemic risks, such as those caused by climate change. Based on this latest effort and the initiative to promote captives and other self-retention tools, the French government appears most open to the concept. Risk managers and insurers across the rest of Europe need to use the French example to step up their efforts on a national and EU level. “Climate change is amplifying the drought phenomena that cause clay shrinkage and swelling (CSS), leading to cracks in houses. This industry-led initiative will assess prevention and protective measures, along with the repair methods endorsed by experts. The aim is to identify the most effective and sustainable solutions,” said the partners in a statement. “For several years now, climate disturbance has been causing widespread drought across France. These occurrences lead to cracks in detached houses constructed on clay-rich soils. These soils shrink during periods of severe drought and then swell, similar to a sponge, when subjected to heavy rainfall… In some cases, families are compelled to vacate their dwellings, which have become uninhabitable,” they added. The regions traditionally affected, spanning from Var to Centre-Val de Loire via the Garonne basin, are growing in scope because of climate change, according to the three partners. This expansion now encompasses regions such as Grand-Est, Bourgogne-Franche-Comté and Auvergne-Rhône-Alpes. The cost of claims associated with this phenomenon has surged significantly, increasing from an annual average of €400m between 1989 and 2015 to €1bn between 2016 and 2020. For 2022, the cost of claims is estimated at more than €3bn, a record since the creation of the natural catastrophe compensation scheme, said CCR. Over a five-year period, the new drought initiative will be rolled out to more than 300 houses selected across the country. In collaboration with policyholders, the objective is to deploy preventive and protective solutions alongside the expert-recommended repair methods. The impact and evolution of these measures will be assessed over time using suitable instrumentation and analysis. There are four types of prevention and additional protective solutions under consideration. These are: Soil rehydration, involving the injection of water near foundations during periods of drought. Soil protection, entailing the installation of foundation containment systems including geomembranes, anti-root screens and drainage systems. Soil treatment, encompassing the injection of a solution near the foundations. Underpinning, with the installation of micropiles or stringers at foundation level. When the initiative is concluded, a full review will be carried out, with annual progress reports to identify the most appropriate measures over time to strengthen the resilience of detached houses. Florence Lustman, chairwoman of France Assureurs said: “The insurance industry is at the forefront of climate change. Our approach, which combines prevention and repair tools to improve the resilience of detached homes in the long run, is core to our mission to protect our policyholders. In collaboration with CCR and MRN, our goal is to enhance our understanding of drought-related risks, enabling us to provide the French population with preventive measures and repair solutions that are commensurate with the challenge at hand.” Edouard Vieillefond, CEO of CCR, added: “We are facing substantial changes that require the identification of effective and enduring solutions for French citizens whose properties are experiencing the repercussions of drought. This quest for solutions is a collective necessity, and I am pleased to announce the launch of this project today in collaboration with France Assureurs and MRN. Our ambition is to ensure that the natural catastrophe scheme can continue fulfilling its mission of national solidarity.”

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