Cover stories

Flooding and reinsurance

The damage caused across the three countries looks certain to cost over €3bn with the bulk of losses recorded in Germany.

In response to the flood events over recent decades German insurers have developed a zoning system, called ZÜRS, to calculate the flood risk from river floods in Germany.

Since its introduction in 2001 ZURS has been updated and developed and it now uses data from more than 200 flood water authorities, 200,000 rivers and over 21 million address coordinates are captured in the system.

The system is based around four hazard classes with different statistical return periods for flood events. Almost every building can be assigned to one of four risk categories from a statistical once every 10 years flood to a less than once every 200 years flood.

Around 10% of German homes are exposed to the risk of a flooding once in a 50-200 year period, with a further 2-3% in the two highest risk categories.

These statistics mean it is little surprise that the take up of flood insurance has been steadily increasing since German insurers began offering these products via elemental perils coverage in 1994.

Today a quarter of German buildings are insured against flood losses, although the take up of cover is much higher in states with a recent loss history.

In Lower Saxony for example the take up rate is at 7%, whereas the take up rate in Baden-Württemberg is 91% and in Saxony, which suffered flooding in 2002 and 2010, is 60%. 

The German Insurance Association (GDV) is attempting to raise awareness of weather perils, including flood, and has launched an internet portal- ZURS to the public. At present this only provides data for Saxony and Lower Saxony but ultimately it should be available for every German state.

At Markel International we provide flood reinsurance coverage as part of elemental perils coverage via Pro Rata treaties, per Risk or per Event XOL's.