Flood-related insured losses in Germany estimated as high as 5.8 billion euros

AIR Worldwide is estimating that insured losses from flooding in Germany, which the catastrophe modelling firm calls historic, will range from 4 billion to 5.8 billion euros.

Despite the worst damage having already occurred, AIR Worldwide cautioned in a statement Wednesday that the flood event is ongoing. The overall economic impact is expected to be much higher than the estimated insured losses.

“An extraordinarily wet May and several days of heavy and relentless rainfall in June have resulted in the worst flooding to hit parts of central Europe in many years,” Yorn Tatge, managing director of AIR Worldwide, says in the statement.

Germany, Austria and the Czech Republic have suffered the brunt of the flooding, although Switzerland, Hungary, Slovakia and Poland have also been affected.

AIR Worldwide reports an enormous amount of precipitation has been released — in some areas as much as 400 litres per square metre within a few days. Over a nine-day period from May 29 to June 6, more than 300 mm of rain fell on some areas. From May 30 to June 1, portions of Austria received 150 mm to 200 mm of rainfall, the equivalent of two and a half months of rainfall, and isolated regions experienced 250 mm.

AIR Worldwide’s loss estimates reflect a number of factors: assumed take-up rates in Germany, about which there is uncertainty; insured physical damage to property (residential, commercial, industrial and auto), structures and their contents from both on- and off-floodplain flooding; and additional living expenses for residential claims and business interruption for commercial claims.

Approximately 90% of the single-family homes in the countries affected are of masonry construction, with the remainder usually being wood and a few being reinforced concrete, the statement notes.

Since most of the homes are one-storey buildings, floods can damage a significant percentage of the buildings and their contents, AIR Worldwide adds. The average take-up rate for residential buildings across Germany is estimated at about 35%.

Apartment buildings in the affected regions are of masonry and reinforced concrete, while masonry is the predominant type for commercial buildings in Germany and Austria.

Unlike single-family homes, mixed-occupancy buildings – with shops on the ground floor and residential on the upper floors – “often have a large degree of engineering and are built to stricter standards with sophisticated flood defences, particularly in flood-prone areas,” AIR Worldwide reports.

It is expected that much of the loss from the 2013 event to occur outside the floodplain. “Smaller claims from off-floodplain losses can add up to constitute a significant portion of total insured losses. Given the duration of this event, AIR expects the flood to be treated as a single occurrence in Germany,” the statement from AIR Worldwide adds.