The October 2024 Depresión Aislada en Niveles Altos (DANA), along with the resulting severe weather and flooding, is expected to incur substantial economic losses across Spain, according to the latest insights from AM Best.
Initial projections indicate a likely impact on the economy that could range from mid- to high-single digit billions in US dollars.
The widespread damage to property, infrastructure, vehicles, and agricultural assets is anticipated to result in extensive financial repercussions, with significant portions of the insured property losses expected to be covered by Spain's Consorcio de Compensación de Seguros (CCS) and agricultural claims likely handled by Agroseguro.
The Association of Valencia Agricultures (AVA) has reported that at least 1,000 hectares (2,470 acres) of crops, including citrus, persimmons, vegetables, and vineyards, are likely to be lost.
In 2023, the province of Valencia had an insurance exposure totaling €376 billion (US$410 billion) across 3.3 million policies, according to CCS. While the floodwaters largely bypassed the city of Valencia, early estimates from the Copernicus EMS flood map as of Oct. 31 suggest that approximately €12 billion (US$13 billion) in insured assets may have been affected.
Initial insurance loss assessments are projected to range between €1.5 billion and €2.5 billion (US$1.6 billion to US$2.7 billion), though these estimates remain preliminary and subject to revisions.
The CCS has confirmed that it will provide indemnification for insured damages resulting from the extreme flooding across Valencia, Albacete, Cuenca, and Eastern Andalucia. The agency will manage claims directly for residential, commercial, and industrial properties, infrastructure, and motor vehicle damage, including losses from business interruptions.
The CCS scope includes coverage for events such as floods, earthquakes, volcanic eruptions, tidal waves, atypical cyclones, tornadoes, extraordinary windstorms (with gusts exceeding 120 kph or 74 mph), impacts from celestial bodies, terrorism, and civil unrest. However, it does not extend to losses from cargo, engineering, liability, or travel policies, nor from precipitation-induced damage or wind speeds below 120 kph, hail, and snow.
This recent DANA event has led to extensive property damage, particularly affecting infrastructure and vehicles, possibly resulting in a CCS loss take-up rate higher than the approximately 90% observed during previous DANA events in Spain, such as those in 2012, 2019, and 2023.
Preliminary estimates for private market insurance losses are in the range of €70 million to €140 million (US$76 million to US$152 million). Larger European insurers, accounting for about half of the property insurance market in Valencia per ICEA 2023 data, are expected to retain much of this loss within their group structures.
The reinsurance sector is also expected to bear part of the financial burden, especially local CAT XL and pro-rata programs. The retention level for CAT XL in the Spanish market is around €15 million to €20 million ($16 million to $22 million).
Preliminary estimates suggest that the reinsurance market may face losses of between €15 million and €50 million (US$16 million to US$54 million), though this figure is likewise subject to further evaluation.
Spain has a long history of severe autumn storms, with this event drawing comparisons to historic floods, including the La Riada in 1957 and the Pantanada de Tous in 1982. The 1957 flood in Valencia, for example, resulted in the loss of over 80 lives and billions of dollars in economic damage (adjusted for inflation).
This event led to the completion of the Turia River diversion, known as Plan Sur, which now channels floodwaters southward to the Mediterranean, bypassing the city center. Since then, the original river path has become the popular Jardines del Turia in Valencia.
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