Insured loss estimates rise for Spanish floods

Estimates for insured losses from the fatal flash floods in Spain last week have risen sharply, after the country’s prime minster said he expected Spain’s nat cat scheme to pay out €3.5bn for the damage on approving a €10.6bn relief package. State-backed Consorcio de Compensación de Seguros (CCS) disclosed it had received 138,317 claims as at 8 November, with motor claims accounting for 60% and the total number of claims rising by thousands daily. CCS has mobilised about 800 loss adjusters to assess the damage as it promised to pay out compensation as quickly as possible for the event, which it recorded as running from 26 October to 4 November. Homes account for the second-largest number of claims at more than 43,600, followed by about 8,130 shops and warehouses, almost 600 claims for offices and 2,500 for industrial risks. Analyst Morningstar DBRS increased its previous insured loss estimate of €1bn+ to more than €4bn, and while most of the loss will be covered under the CCS, the agency said "we expect rates to increase going forward to allow the CCS to gradually replenish the reserve". Gallagher Re said it expected public and private insured losses from the floods to cost between €1.5bn and €2.5bn, with most property and agricultural damage covered by both the CCS and the agricultural insurance scheme operated by Agroseguro. Moody’s pegged the loss at in excess of €3.5bn, based on analysis of the first 72,000 claims. The rating agency said about 4,500 businesses in the Valencia region were directly affected by the floods, with half facing potential closure. It estimated crop losses at about €150m. Analysts from Bloomberg Intelligence said while Spain’s largest-ever loss is expected to be met by the CCS, “private companies like Mapfre, Mutua Madrilena, Allianz, AXA, GCO and Generali will pay only part”. Aon said additional insured losses outside the CCS scheme, under which the coverage of extraordinary risks is mandatory for property insurance offered by private insurers, will be met by carriers. Insured losses from agricultural damage from the floods is expected to exceed €160m, Aon said, largely falling to the Agroseguro, which said the event is likely to be the costliest storm caused by cut-off low-pressure system DANA in the history of agricultural insurance. Aon said the event is likely to become one of the costliest nat cat events in Spain and while the confirmed number of deaths stands at 219, this is expected to rise, with dozens more missing. Aon said it could be the deadliest flood in Europe since 2000, surpassing the floods in Bernd, Germany in 2021 when 226 people died. Catastrophic flooding caused damage to thousands of buildings, infrastructure and agriculture during the DANA storm, primarily in Valencia on 29 October. But another round of torrential rain and flooding struck in Barcelona on 4 November, causing the city’s airport to cancel more than 80 flights. Aon said it is too early to give an accurate insured loss figure, but that it expected the loss to be in the billions of dollars. Analysis of satellite data from ICEYE revealed more than 4,600 buildings have been affected by the floods across the cities of Valencia, Barcelona, Sevilla and Huelva. Rating agency S&P Global Ratings said the losses from the flash floods will have a limited effect on private insurers and reinsurers relative to the magnitude of the event, with CCS footing the majority of the bill. “The property/casualty insurance industry in Spain is exposed to low risk because the CCS mitigates the volatility of profitability from natural catastrophe events by absorbing the majority of peak losses,” S&P said.

Insured loss estimates rise for Spanish floods

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