Verisk Estimates Industry Insured Losses from Flooding in Central Europe to Range from EUR 2 Billion (~USD 2.2 Billion) to EUR 3 Billion (~USD 3.4 Billion)

Rhea-AI Summary

Verisk's Extreme Event Solutions group estimates that insured industry losses from the September 2024 flooding in Czechia, Poland, and Austria will range from EUR 2 billion to EUR 3 billion. The event, caused by a Vb weather system, resulted in extensive property damage across several European nations. In Poland, over 11,500 residential buildings and 6,000 agricultural and commercial buildings were affected. The Czech Insurance Association reported over 60,000 claims totaling approximately EUR 770 million in insured losses. Austria's Lower Austria region experienced catastrophic impacts, with floodwaters reaching levels seen only once in 1,000 years on average.

The estimates include insured physical damage to property, additional living expenses, and business interruption claims. Insurance coverage varies by country, with Austria and Czechia having higher flood insurance take-up rates compared to Poland.

Positive

• Verisk provides detailed estimates of insured losses, demonstrating expertise in risk assessment
• The event highlights the importance of Verisk's services in the insurance industry
• High insurance take-up rates in Austria and Czechia may lead to significant business for insurers

Negative

• The flooding event could result in substantial payouts for insurance companies, potentially impacting their financial performance
• Lower flood insurance coverage in Poland may limit the insured loss tally, affecting potential revenue for insurers and Verisk

Insights

Insurance Industry Analyst

This flood event in Central Europe represents a significant insured loss for the insurance industry, estimated between EUR 2 billion to EUR 3 billion. The scale of damage, particularly in Poland, Czechia and Austria, is extensive, affecting residential, commercial and public infrastructure.

Key points to consider:

• The Czech Insurance Association reported over 60,000 claims, with 60% related to business insurance, indicating substantial commercial impact.
• Varying insurance penetration rates across countries will influence the proportion of economic losses covered by insurers.
• The event's classification as a 1,000-year flood in some areas suggests potential for record-breaking claim amounts.

For investors, this event may impact insurers and reinsurers with exposure in these markets, potentially affecting short-term profitability and leading to reassessment of risk models and pricing strategies in the region. Long-term, it could drive increased demand for flood insurance and risk mitigation solutions, benefiting companies like Verisk that provide analytics and risk assessment tools.

Climate Risk Analyst

This flooding event, caused by a Vb ("five-b") weather system, highlights the growing importance of climate risk assessment in the insurance and property sectors. The widespread impact across multiple countries and the severity of the flooding underscore the need for sophisticated modeling and risk management tools.

Key observations:

• The unusual weather pattern leading to extended rainfall periods may indicate changing climate dynamics.
• The effectiveness of Vienna's flood protection infrastructure contrasts with severe impacts in surrounding areas, emphasizing the value of adaptive measures.
• The event's classification as a 1,000-year flood in some regions suggests a potential recalibration of flood risk assessments may be necessary.

For investors, this event underscores the growing market for climate risk analytics and adaptation strategies. Companies like Verisk, which provide these services, may see increased demand. Additionally, there could be heightened interest in infrastructure and property resilience solutions, potentially creating investment opportunities in related sectors.

BOSTON, Oct. 01, 2024 (GLOBE NEWSWIRE) -- The Extreme Event Solutions group at Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, estimates that insured industry losses from the flooding in Czechia, Poland and Austria in September 2024 will range from EUR 2 billion (~USD 2.2 billion) to EUR 3 billion (~USD 3.4 billion).

Like the June flood event in Europe that primarily impacted Germany, this weather event was caused by a Vb (“five-b”) weather system, a relatively unusual setup that can lead to significant extended periods of rainfall and flooding.

This event spread across several European nations during September with some of the worst impacts occurring along the border of Poland and Czechia. The Polish Prime Minister’s office reported as of September 19 that property damage was extensive, with at least 11,500 residential buildings—both single-family homes and multi-unit structures—either flooded or damaged. Additionally, more than 6,000 agricultural and commercial buildings, along with more than 700 public-use structures, including schools, kindergartens, sports facilities, administrative buildings, bridges and roads, were damaged or submerged. 

The Czech Insurance Association reported during the week of September 22 that more than 60,000 claims had been received by Czech insurers so far, with 19.3 billion CZK in insured losses (roughly EUR 770 million or USD 850 million). The report also indicated that roughly three-fifths of those claims are related to business insurance. While Vienna was spared major impacts by retention basins designed to protect the city, the surrounding region of Lower Austria had catastrophic impacts, largely from the River Wien, a tributary of the Danube.

According to local authorities, the floodwaters in this area were said to be roughly that experienced in 1,000 years on a long-term average. Parts of Germany, Hungary, Romania, Slovakia and Italy also experienced mild to moderate flooding impacts from this event.

The proportion of the economic impact of this event paid by the insurance industry will vary by country. In Austria and Czechia, flood insurance take-up rates are relatively high, though lower limits on flood, especially in Austria, may offset this somewhat in the eventual insured loss tally. In Poland, most of the commercial risk is covered, but only a small fraction of homes and autos carry flood coverage.

Verisk’s loss estimates include insured physical damage to property (residential, commercial, industrial, auto, agriculture), both structures and their contents, from both on- and off-floodplain flooding. They also include additional living expenses (ALE) for residential claims and business interruption (BI) for commercial claims.

Verisk’s loss estimates do not include:

• Losses in Germany or other countries not listed above
• Losses to uninsured properties
• Losses to infrastructure
• Losses from extra-contractual obligations
• Losses from hazardous waste cleanup, vandalism, or civil commotion, whether directly or indirectly caused by the event
• Other non-modeled losses

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About Verisk 
Verisk (Nasdaq: VRSK) is a leading strategic data analytics and technology partner to the global insurance industry. It empowers clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, sustainability and political issues. Through advanced data analytics, software, scientific research and deep industry knowledge, Verisk helps build global resilience for individuals, communities and businesses. With teams across more than 20 countries, Verisk consistently earns certification by Great Place to Work and fosters an inclusive culture where all team members feel they belong. For more, visit Verisk.com and the Verisk Newsroom.

FAQ

What is Verisk's estimated range for insured losses from the September 2024 Central European floods?

Verisk estimates that insured industry losses from the September 2024 flooding in Czechia, Poland, and Austria will range from EUR 2 billion (approximately USD 2.2 billion) to EUR 3 billion (approximately USD 3.4 billion).

How many claims have been reported by Czech insurers due to the September 2024 floods?

According to the Czech Insurance Association, more than 60,000 claims had been received by Czech insurers as of the week of September 22, 2024, with insured losses totaling approximately EUR 770 million (USD 850 million).

What types of damage are included in Verisk's (VRSK) flood loss estimates?

Verisk's loss estimates include insured physical damage to property (residential, commercial, industrial, auto, agriculture), both structures and contents, from on- and off-floodplain flooding. They also cover additional living expenses for residential claims and business interruption for commercial claims.

How severe was the flooding in Austria during the September 2024 event?

While Vienna was largely protected by retention basins, the surrounding region of Lower Austria experienced catastrophic impacts. Local authorities reported that floodwaters in this area reached levels typically seen only once in 1,000 years on a long-term average.