XPRIMM: There are numerous studies that show that the frequency and intensity of natural catastrophes in Europe have been increasing during these last years. Has this trend been observed in Germany too, and to what extent?
GDV - German Insurance Association: Indeed, referring to natural catastrophes we see that claims expenditure and claims average tend to rise for the long term. We cannot say whether this trend is caused by climate change or single extreme weather events. We must rely on extern knowledge from climate scientists and meteorologists.

Therefore, if meteorology and science detect a change in extreme events trend, which simultaneously goes along with observed losses, then the occurrence of losses is driven by the insured value and by the number and intensity of natural catastrophe events

Fortunately extreme events, such as the hailstorm in Baden-Wurttemberg in 2013, the winter storm Kyrill in 2007 or the European floods in 2002 are not a daily routine. But that's also why for scientists it is not easy to detect a trend. Therefore, one must have enough data in sufficient quality and quantity. And even if there is enough data, sometimes no trend can be detected.

Especially the Climate Service Center concentrated on this issue. It states that global warming can already be observed, and the global warming is positively linked to a potential increase of extreme weather events. As a result, it is very likely, that the trend in weather extremes observed in the last 20 to 30 years will also continue in future.

The German Weather Service comes to the same conclusion. It is a member of an alliance of federal authorities called "climate change and civil protection." The alliance aims at accompanying the management of climate change impacts, and, in particular, extreme weather events. Already in 2012 the alliance clearly stated an increase in extreme weather events.

Therefore, we can resume, that not only the increase in insured values, but also the number and intensity of natural catastrophe events are responsible for the observed losses.

XPRIMM: Storm activity and the subsequent flooding were an issue on more European markets in 2014. How has the German insurance industry been coping this phenomenon?
GDV: In Germany, the year 2014 was one with moderate losses. However, 2013 was on the top of the scale, especially due to the European floods in June 2013 and heavy hailstorms throughout the summer.

For many years, the German insurance industry has been offering products to cover losses from natural hazards. Therefore, insurers are well organized and well prepared to cope with big loss events.

XPRIMM: Have you noticed an increase in the reinsurance premiums in the last year? Was this reflected in direct insurance premiums?
GDV: We do not monitor re-insurance premiums and their respective influence on the direct insurance market.

XPRIMM: What role does the insurance industry play when it comes to managing the impact of natural catastrophes?
GDV: Policyholders have a clearly defined and contractually guaranteed right of compensation. On the other hand, non-insured persons can only hope to receive donations or publicly financed subsidies. Therefore, as long as public money is short, we better all get an insurance cover against natural hazards.

XPRIMM: What solutions can be employed by the private insurance sector to mitigate the flood risk?
GDV: In Germany insurance cover against flooding is offered on a risk-based premium basis. Often this is a wake-up-call for homeowners and municipalities. As a result, municipalities reassess their decisions on setting up new construction sites in flood prone areas or invest in / enforce the use of flood defense measures.

XPRIMM: Could you please comment upon the property insurance penetration on the residential side in Germany?
GDV: There is virtual no building in Germany, which doesn't have fire insurance. Additionally more than 90% of all buildings have an insurance cover against losses from hail and storm. 40% of all buildings do have an extended cover against natural hazards, including flood, heavy rainfall, snow pressure, subsidence, landslides, etc.

XPRIMM: Several countries have developed mandatory cat schemes. Is this something that Germany is looking into?
GDV: In the past, the introduction of compulsory insurance against natural hazards was discussed over and over again. However, because in Germany we do have a working and efficient market for natural hazard insurance, there is no need for a compulsory solution.

XPRIMM: What is the main challenge for the German non-life insurance companies, generally speaking?
GDV: The biggest challenges are the current low-interest-rate phase, the digitalization of all areas (life, trade, business processes) as well as the over aging of buildings ("restoration delay)".

XPRIMM: What would be your advice, as a mature and developed insurance market, towards emerging ones, such as Romania, for example?
GDV: People need insurance products they can truly rely on in a loss event. That is quite obvious but also very crucial. Only in a loss event the policyholder will know how good an insurer and his products, in fact, are.