A recent study by the Society for Economic Structural Research (GWS) projects that climate change could inflict approximately EUR 690 billion in economic damages on Germany between 2025 and 2050. The insurance industry is among the most affected sectors, alongside healthcare and agriculture, commented the German Insurance Association (GDV).

Utilizing the INFORGE economic model and data from the German Insurance Association and the German Weather Service (DWD), the study reveals a significant rise in climate-related damages. Average annual damages increased from EUR 4 billion during 2000–2014 to EUR 10.3 billion in 2015–2024. This upward trend is expected to continue, reflecting the growing frequency and severity of extreme weather events.

The insurance sector is projected to bear EUR 230 billion in cumulative economic losses by 2050 due to higher premiums, increased reserves, and more frequent payouts. These financial strains could lead to a 0.5% reduction in Germany's inflation-adjusted GDP and a loss of over 50,000 jobs. Additionally, depreciation rates for properties are anticipated to rise by 3%, effectively shortening building lifespans by about two years. Households are also expected to set aside nearly EUR 40 billion in reserves to cover potential property damages, GDV said.

While climate adaptation measures cannot entirely eliminate damages, the study suggests they could prevent up to EUR 600 billion in losses. Implementing strategies such as stricter building codes, improved flood defenses, and enhanced risk assessments are crucial. The GDV emphasizes the urgent need for comprehensive adaptation efforts to mitigate the financial impact on the insurance industry and the broader economy.

Read the full article on GDV website.