Insured Flood Losses in Germany Could Range From US$2.1B to US$3.2B: Moody’s RMS

Insured losses from floods that hit Central Europe between Thursday, May 30 and Monday, June 3 will likely fall within the range of €2 billion to €3 billion (US$2.1 billion to US$3.2 billion), according to Moody’s RMS Event Response.

The estimate includes insured losses for southern Germany, which is expected to constitute most of this event’s loss, but excludes flood losses in Switzerland, Austria, Czechia, Hungary, and Italy, because losses in these countries are anticipated to be minimal. It also excludes any potential losses from subsequent flooding further downstream and/or triggered by renewed precipitation.

Heavy and persistent rainfall fell across central European areas between Tuesday, May 28, and Monday, June 3 as a series of low-pressure systems slowly crossed and remained over central Europe for several days.

Insurers Expect Major Loss Event From Floods in Southern Germany

An initial period of heavy rain on Tuesday, May 28 was followed by a more prolonged period of heavy rain mainly focused on southern Germany between Thursday, May 30, and Monday, June 3, with several areas observing rainfall amounts greater than their monthly averages. This led to widespread flash and river flooding, initially of smaller rivers across southern Germany (mainly in Baden-Württemberg and Bavaria), with the Danube River later reaching flood stage in several locations as the floodwater from the headwater catchments accumulated downstream.

Low-pressure systems with trajectories from the Mediterranean and across central Europe are also known as Van Bebber (Vb-type) cyclones, and have been responsible for some of the most severe central and east European flood events, such as the well-known 2002 and 2013 floods.

This loss estimate is based on an analysis of the flooding using Moody’s RMS Europe Inland Flood HD Models, reflecting insured property damage, spoiled contents, and business interruption across residential, commercial, industrial, agricultural property, and automobile lines.

The loss estimate also considers sources of post-event loss amplification (PLA), recent inflationary trends, exposure growth, and increases in insurance take-up. The estimate does not include insured losses to non-modeled exposures such as transport and utility infrastructure lines of business, or crops.

“This event has much in common with the central European floods of 2013, and not just because it fell on the same days in the year,” commented Daniel Bernet, assistant director, Model Product Management, Moody’s, noting that insured losses from 2013 and the current event are in the same range for losses.

“May 2024 was among the wettest months recorded in southern Germany. Soils were fully saturated after the initial heavy rainfall on May 28 and May 30, the more prolonged rainfall associated with a typical Vb-type event then led to widespread flooding in southern Germany,” said Bernet.

“In Baden-Württemberg, given the flood insurance take-up rate is as high as 94%, most of the residential losses will be covered. Unfortunately, this high level of coverage is not the case in Bavaria where the flood insurance take-up rate is 47%,” he added.

Similarly, properties will not be covered for direct ground-water intrusions, which was a common phenomenon seen during the 2013 event, he said. “From a flood modeling perspective, the 2013 and 2024 events again highlight how important it is to appropriately capture key elements such as antecedent conditions, Vb-type events, cross-country correlations, flood defenses, and combined fluvial and pluvial flooding.”

Source: Moody’s

Photograph: Parts of the old town are flooded by the Danube river, in Passau, Germany, on Thursday, June 6, 2024. (Armin Weigel/dpa via AP)