The storm, which last week caused flooding especially in Germany, but also in Switzerland, Belgium, Luxembourg and the Netherlands, will cost insurers two to three billion euros. This is what the investment bank Berenberg assumes. The alliance is therefore hardest hit. However, the British analysts did not include public insurance companies in their calculations. However, the Düsseldorfer Provinzial, which is active in North Rhine-Westphalia and the north of Rhineland-Palatinate, and the Versicherungskammer Bayern in Munich, with its business area in the south of Rhineland-Palatinate, are also facing considerable claims payments. The companies are traditionally strong building insurers in their regions. This also means that your reinsurer, Deutsche Rück, has to reckon with high losses. The real claims expenditure could therefore be higher than the Berenberg Bank estimate.
The low “Bernd” had badly devastated Rhineland-Palatinate and North Rhine-Westphalia, but also Bavaria and Saxony-Anhalt with heavy rains. Over 160 people died. The Berenberg analysts estimate the damage in Germany alone at one to two billion euros. In contrast to the Elbe floods in 2002, which caused damage amounting to 4.5 billion euros insured at today’s prices, this time smaller towns and communities were hit. The floods of 2013 are therefore more suitable as a benchmark. They cost the insurers 1.8 billion euros. This coincides with the assessment of the industry association GDV.
However, the economic damage will be much greater. In the case of comparable flood disasters, usually only 20 percent to 25 percent of the total damage was insured. This is also due to the fact that only 46 percent of buildings in Germany have flood cover.
At Allianz, the Berenberg analysts expect a net charge of 250 million euros. The Munich-based company has a market share of around 13 percent in the affected federal states of Rhineland-Palatinate and North Rhine-Westphalia. This is followed by Generali (225 million euros), Axa (110 million euros) and Zurich (106 million euros). According to the analysts, Talanx will only have to pay around 40 million euros. Ageas, Helvetia and Baloise are also asked to pay.
The already deficit home insurance is likely to slide even deeper into the red. Although providers have increased prices in recent years and terminated customers with high claims, the claims and expense ratio averaged 106 percent between 2000 and 2019, according to the Cologne-based rating agency Assekurata. That means: The insurers had to pay 1.06 euros for each euro in premium to pay for claims as well as administration and sales costs. They can hardly compensate for this underwriting loss with investment income because of the low interest rates. Household contents insurance, on the other hand, is a stable profit maker.
Last year went well for insurers – also because there was little damage due to corona. But in 2021 the balance sheets will be ruined. In June, the risk takers had already paid 1.7 billion euros for storm damage. “We will see significant underwriting losses,” believes Assekurata boss Reiner Will.
The providers could therefore turn the price screw again. “That won’t be the first reaction from insurers, but they’ll see if it’s a single event or a trend,” says Will. “In the medium term, there could be some impact on the premium.” In addition, the industry will use the storm to advertise intensively among its customers to take out additional insurance against natural hazards.