The precipitation was linked to a low-pressure system with a trajectory from the Mediterranean across central Europe, also known as Van Bebber (Vb-type) cyclones. This cyclone type is well-known to be responsible for some of the most devastating flood events in central and eastern Europe, such as events in 2002, 2013, 2016, and now 2024.
Although a clearer picture of the loss will emerge with time, it is already clear that the expected insured loss from that event will subsume into a series of multi-billion Euro losses from similar events in the more recent past. The current event loss will only be surpassed by the ‘Bernd’ Flood in western and central Europe during 2021, dwarfing all other European flood events in the past decades, with a billion euro loss value in the low double digits, an article published on Moody’s Insurance Solutions blog reads.
A large portion of the losses remain uninsured, as homeowner building insurance in Germany typically covers physical damage from windstorms or hail, but not for flood. Baden-Württemberg is an exception with compulsory flood coverage until 1994, after which take-up rates have remained high.
These regular European flood events highlight how important it is to appropriately capture key elements such as antecedent conditions, Vb-type events, cross-country correlations, flood defences, and combined fluvial and pluvial flooding. Understanding the risk is proving pivotal. To provide confidence in managing this complex risk, comprehensive modelling that captures flood risk holistically is required, as relying on historical data alone is proving inadequate.
The multi-billion-euro losses experienced in Germany will again raise flood risk up the insurance agenda and across the value chain. Using advanced HD risk models, firms can confidently participate, write more business, protect more homes and commercial clients, minimize uncertainty, and increase capital efficiency, concludes the Moody’s blog article.
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