Germany needs flood ‘masterplan’, says GDV

The German insurance association (GDV) has called for a “well thought-out masterplan” with federal and state involvement to tackle the nation’s rising flood challenge, after Germany suffered another €200m in losses over the Christmas period.

As the association launched its analysis of members’ 2023 figures, GDV CEO Jörg Asmussen said: “The states and municipalities have major deficiencies when it comes to prevention and adapting to climate change. Many of our problems, especially when it comes to flood prevention, are homemade and entirely preventable.”

Asmussen first mentioned the losses relating to the flooding in Northern and Central Germany around Christmas time. “According to our estimates, the insured losses come to around €200m,” he said.

The GDV rejects a compulsory insurance solution, which is currently advocated by many policymakers. Rather, the insurer association supports the implementation of a “well-thought-out master plan, which includes a variety of coordinated actions”.

There are three measures that the GDV considers to be “urgently necessary right now”.

First: no new construction in designated at-risk zones. Second: prevention and adaptation to climate change should be incorporated into state building codes. Third: the public sector should clearly specify the risks at each location through a nationwide natural risks portal.

“Only if the risks are transparent will the responsible persons implement preventive measures. Other countries, like Austria and Switzerland, are years ahead of us in this regard,” said GDV president Norbert Rollinger.

Despite these challenges, the GDV said that the German insurance industry performed well in the 2023 financial year and insurers are cautiously optimistic about 2024.

Premiums were up slightly across all insurance lines, climbing by 0.6% to €224.7bn. The industry expects premium growth to reach 3.8% this year due to growth in nominal wages and declining inflation.

“Considering the difficult conditions, such as the global uncertainty, we are completely satisfied with our results in 2023,” said Rollinger at the association’s annual media conference. “We are actually somewhat more optimistic about the current financial year.”

In casualty and accident insurance, results in the past year were shaped by downstream adjustments to claims expenditures such as construction expenses and the higher cost of car repairs, said the GDV.

While premiums in this line were up by 6.7%, to €84.5bn, claims expenditures climbed 12.7%. In motor insurance alone, the rising costs produced a net actuarial loss of around €2.9bn for German insurers.

“For each euro we took in, there was €1.10 in expenditures,” said Rollinger.

Net actuarial profit for casualty and property insurance as a whole was cut in half, to around €1.5bn.

The GDV expects casualty and property insurance premiums to grow by 7.7% this year. “The trend in motor insurance especially will likely be shaped by pent-up demand,” said Rollinger.

“There is also reason to fear that repair costs will continue to rise. As a result, we expect premiums in this area to grow by 10% in 2024,” he added.