They are images of unprecedented devastation, those affected hesitantly report how their existence was washed away within minutes, their desperation written all over their faces. And then a ritual takes place, a ritual that is repeated with unsightly regularity after every natural disaster in Germany: state and federal politicians arrive, are photographed and promise unbureaucratic help into all microphones. The insurers promise to compensate affected customers quickly.
But after a few months it turns out that the help is anything but unbureaucratic and does not reach many of the victims. And some insurers are rather stubborn when it comes to claims settlement. Whereupon there is another debate about whether building owners could not be obliged to take out insurance against such elementary damage.
Break the ritual
Under the impression of the devastating floods in Rhineland-Palatinate and NRW almost eleven months ago, the federal states now want to break through this deadlocked ritual and draw noticeable consequences. More than 180 people died and property damage ran into billions – much of it uninsured. That is why the federal states are now asking the federal government to examine the introduction of compulsory insurance for buildings in endangered areas by the end of the year.
The problem: Simple building insurance is not enough to protect against flooding and other so-called natural hazards. Homeowners need additional coverage for this. But only half of homeowners have taken out protection. It is expected that climate change will increase the risk of severe storms.
But which way is the right one is hotly debated. Although private insurers also believe that more homeowners should take out insurance against natural hazards, they believe compulsory insurance is wrong. Instead, the lobby association GDV is promoting its own concept: in the future, elementary risks should be covered as standard when building insurance is taken out – unless customers expressly want to exclude the risk. Then they would have to explicitly take responsibility if something happened.
All homeowners should get new contracts
If the association has its way, this should also apply to existing contracts, and the insurers should convert them by a deadline. “The insurers take up written contact with the customers and inform them about the new contracts and the future premium,” says Managing Director Jörg Asmussen. Customers can then accept or object to the new contracts. “But because all building insurers do that, we need a transitional law from the federal government.”
Asmussen considers the potential range of compulsory insurance to be far less, because the constitutional report by the Minister of Justice sets narrow limits to such a measure. “If, for example, there is only one obligation for buildings in risk areas, only 1.5 percent of private houses in Germany would be affected,” says Asmussen.
There is already compulsory insurance in Germany – in motor vehicle liability insurance. Every vehicle owner needs such coverage. However, it only covers damage caused to third parties, unless you have fully comprehensive insurance. The situation is different in the case of potential compulsory insurance for building owners, critics complain: Here it is not about the risk of third parties being harmed and possibly being left behind, but about risks to one’s own assets. This is another reason why the insurance lobby is against it. Such a serious intervention is not justified because milder alternatives are available.
Destroyed files in front of the town hall in the village of Altenahr, where the flood destroyed many houses.
(Photo: Christoph Hardt/imago images/Future Image)
Homeowners associations are also opposed to compulsory insurance. “Compulsory insurance, as it has now been pushed by Baden-Württemberg, is not an option for us,” says Ralf Schönfeld, director of the Rhineland-Palatinate state association of the Haus & Grund private landowners’ association. Along with North Rhine-Westphalia, the federal state was particularly strong from the low Bernd met. As a reason for the refusal, he states that homeowners have already had to contend with a large number of regulatory requirements.
However, the association is not against the insurance itself, it expressly encourages homeowners to take out elementary damage coverage. “We strongly recommend that you take out such a policy,” emphasizes Schönfeld. Instead of coercion, Haus & Grund relies on voluntary risk prevention. Schönfeld expresses sympathy for the concept of an opt-out, as provided for in the insurance industry’s proposal. “And anyone who opts out of protection foregoes state support,” explains Schönfeld.
This is intended to relieve the state, which repeatedly finds itself forced to use taxpayers’ money to help those affected by severe natural disasters. For those from the low Bernd The federal and state governments have set up a recovery fund of 30 billion euros for the damage caused.
Get out of the Samaritan dilemma
The Federation of Insureds, an association representing the interests of insurance customers, is one of the proponents of compulsory insurance. Also because, according to his observation, many building owners are not aware that the risks of natural disasters are not covered by basic building insurance. “The BdV expects politicians to free us all from the Samaritan dilemma and now find a comprehensive, mandatory solution,” said BdV board member Stephen Rehmke.
The association proposes that the federal states set up a risk pool to cover elementary damage risks, which all building owners should finance through a surcharge on property tax. Homeowners who have taken out private insurance should be exempt from the surcharge and participation. At the same time, the proposal provides for homeowners to be supported in their search for suitable natural hazard coverage. An independent comparison portal is to be set up for this purpose.
At the insurance association GDV, this arouses little enthusiasm. “I consider our overall concept to be the best available on the market,” said General Manager Asmussen. An insurance solution alone does not do justice to the topic from the point of view of the association. He criticizes that prevention and adaptation to the consequences of climate change have so far played too little a role. The GDV requires additional construction measures, and a building ban should be issued in risk areas. “In the Ahr Valley, for example, all but 34 houses will be rebuilt at their original locations,” criticizes Asmussen. “Sometimes putting a house on a pedestal can be enough.”