Storm “Bernd”: Bafin expects damage of up to 5.7 billion euros

Damage from storm “Bernd”. Source: Bernd Engelien / Zurich.

The German insurers expect damage of up to 5.7 billion euros after the flood disaster in the Rhineland and the Eifel. This is the result of a recent survey by the German financial regulator Bafin. In addition, German reinsurers expect a net burden of around one billion euros in the worst case.

According to this, the net burden in residential building insurance is around 700 million euros, in household contents insurance and in motor comprehensive insurance around 200 million euros each, reports the news agency Reuters citing the Bafin survey. “We classify these key figures as quite valid,” emphasizes Bafin Executive Director Frank reason. The German financial supervisory authority asked around 150 primary insurers and 28 reinsurers about the consequential damage caused by “Bernd”.

“From the reports so far, however, it can be seen that there is no threat to the continued existence of the company – neither with property and casualty insurers nor with reinsurers.”

Frank Grund, Executive Director at Bafin

However, according to the report, Grund is not worried about its existence – even if there are large regional differences. However, he stressed that homeowners should use the flooding as an opportunity to think about their insurance coverage. Less than half of the property owners and entrepreneurs affected by the current flood disaster would have taken out insurance against natural hazards.

Only 45 percent of German residential buildings are insured with “extended natural hazard protection (elementary)” and thus against heavy rain or floods. According to the German Insurance Association (GDV), 35 percent of residential buildings in Rhineland-Palatinate and 45 percent in North Rhine-Westphalia were insured accordingly in 2019. Until 2017, Bavaria, North Rhine-Westphalia and Saxony were the federal states in which heavy rain had caused the highest damage in Germany.

The GDV expects so far with a loss burden from “Bernd” in the amount of 4.5 to 5.5 billion euros. “The damage is likely to be even higher than that of the August flood in 2002 of 4.65 billion euros,” emphasizes GDV Managing Director Jörg Asmussen. This means that 2021 is likely to be the worst year for insurers since 2002. At that time, the insured storm damage, according to GDV, was 10.9 billion euros.

What: GDV

For R + V Versicherung alone, “Bernd” is likely to be the most expensive loss event in history. The cooperative insurer in Wiesbaden currently expects a loss burden of around 470 million euros so far. A total of around 14,000 claims were received. The final extent of the damage has not yet been determined.

“We add to our loss reserves every day, because the appraisers find out during the on-site inspection that the destruction is in many cases far worse than feared.”

Norbert Rollinger, CEO of R + V Versicherung

In comparison, Provinzial’s balance sheet is significantly more expensive: So far, Provinzial’s customers have reported a total of 33,142 claims with a volume of EUR 761.3 million across the group (as of August 2, 2021). “The low pressure area ‘Bernd’ is the largest and most expensive damage event in the history of the Provinzial”, stated Wolfgang Breuer, Chairman of the Board of Provinzial Holding.

July storms hit Allianz hard with storm “Bernd”: the insurer has so far recorded more than 30,000 damage reports on damaged houses and household items as well as more than 5,000 vehicle damage with a loss volume before reinsurance of more than 500 million euros. Of the 14,500 damage to property reported so far by “Bernd” (building and household effects), Allianz has already fully settled 4,700 cases with customers. To date, over 58 million euros have already been paid out.

At Talanx, the floods in Western Europe are currently accounting for at least EUR 600 million in gross damage. For the third quarter of 2021, Talanx is assuming a charge of just over EUR 300 million. “The average loss amounts exceed everything that we have had in Germany so far,” emphasized the CFO Jan Wicke at the presentation of the half-yearly figures. The insurance manager sees the main reasons for this in the high level of decontamination of houses, properties, lines and pipes.

LVM Versicherung expects more than 9,400 claims reports in property and car insurance as well as a total expenditure of around 165 million euros. Of the total damage, around 147 million euros relate to natural hazards in residential buildings and household contents insurance. LVM car insurance calculates damage of 18 million euros. So far, more than 4,600 damage to buildings and household items have been reported from North Rhine-Westphalia. The LVM from Rhineland-Palatinate received around 900 damage reports.

The Bavarian Insurance Chamber (VKB) expects claims expenses of 150 to 225 million euros after the storms in July 2021. In addition, the insurance chamber assumes a total of 40,000 to 50,000 claims, around 500 major claims have already been reported. The most recent heavy rain event in the Rosenheim district, particularly in Halfing on July 28, has not yet been taken into account.

Munich Re currently puts the flood damage at a three-digit million figure. For the flood damage in Germany, Belgium, the Netherlands, Switzerland and Austria in July, Hannover Re anticipates a net burden of between EUR 200 and 250 million based on the first damage analyzes. The numbers are still burdened with high uncertainties. Deutsche Rückversicherung AG (Deutsche Rück) puts the damage caused by storm “Bernd” at between 40 and 50 million euros.

Author: VW editorial team

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