European flood industry loss up to US $7.7bn: RMS

European flood industry loss up to US $7.7bn: RMS

Disaster threat modelling firm RMS has offered an estimate of the insurance and reinsurance market loss from Julys destructive flooding across Europe, saying it might be as high as EUR6.5 billion (United States $7.7 bn). Flooding in Germany, picture from Christoph Reichwein– AFP
RMSs estimate is interesting, as the risk modeller has actually chosen for a lower insured loss for Germany than even the nations own insurance association believes it to be, recommending RMS estimate might show too low.
RMS said the overall market loss throughout Europe from the floods is expected to be in between EUR5 billion and EUR6.5 billion (US $6 billion and US $7.7 billion).
For Germany alone RMS approximates the loss will be in between EUR3.5 billion and EUR4.5 billion.
This is some method below the price quotes from Germanys insurance coverage association, the GDV, which said it anticipates the industry loss will be towards the top-end of its approximately EUR5.5 billion estimate.
BAFIN stated that after polling insurance companies, it thinks the loss for Germany will be around EUR5.7 billion, with more than EUR1 billion falling to the nations reinsurance companies.
So RMS appears to be extremely low on Germany, which is surprising given how lots of quotes are already offered there, including from its insurance coverage association.
However, this is down to the different treatments used to reach a figure, as RMS estimate is based upon a flood danger footprint, so is modelled and not taking into consideration reporting from insurance companies.
RMS discussed that this is new flood footprint functionality that is readily available in its RMS Europe Inland Flood HD Models working on Risk Modeler.
RMS market loss price quote includes insured residential or commercial property and organization disruption loss to residential, industrial, industrial, vehicle, and infrastructure lines and accounts for the capacity of post-event loss amplification and extended company disruption.
RMS loss estimate also omits losses observed in the Netherlands, which sits outside of the model domain, and losses in Switzerland, Bavaria and Saxony in Germany, and Austria, which were caused outside the time window of the heaviest rains.
The delta in between RMS price quote and the others, provided it doesnt even include the whole of Germany, making for really tough contrasts.
Daniel Bernet, product manager, Europe Flood Models, RMS, commented, “In terms of loss, this event is expected to be similar to the costliest European flood events in recent history, the Central and Eastern Europe floods of 2002 and 2013. Nevertheless, unlike the 2002 and 2013 occasions during which overtopping and breaching of major rivers contributed substantially to total damages, the 2021 event took place in a different region and was identified with much steeper and faster flood waves with greater circulation velocities in smaller rivers and tributaries that triggered considerable structural damage, and regretfully, an uncommonly high number of fatalities.”
Given whats in and out of this estimate, our company believe RMS figure indicate a higher total loss for the insurance and reinsurance market than most have actually reported up until now.
Which possibly suggests that investment bank Jefferies up to US $8.6 billion market loss figure now looks more likely to be near the eventual tally.

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