While the debate continues here in Canada as to what shape flood insurance should take, one senior German had that country’s insurers spitting out their beer with his no-nonsense approach to the problem.
“We would do well to introduce an affordable insurance against natural hazards for everybody,” Florian Pronold, parliamentary state secretary in Germany's Environment Ministry, told an industry conference, despite objections from insurance industry representatives.
Pronold sees the measure as spreading out the cost evenly, and not only covering flood – but all natural disasters.
Insurers paid out 1.8 billion euros ($2.69 billion) on 140,000 damage claims from last year's severe flooding in southern and eastern Germany, but this was only a fraction of the total as many properties were uninsured.
About 85 per cent of damage came from areas well away from those considered at high risk for floods.
Flooding became the hot topic last June when southern Alberta cities Calgary and High River were hit hard by high waters, in some cases driving out shopkeepers and residents for a week or more.
Pegged as the costliest natural disaster in Canadian history, estimated damages came in at around $2 billion.
As if to drive the point home, downtown Toronto and parts of southern Ontario were also flooded out for a day, adding stimulus to a debate on how to deal with the problem of overland flooding, and how governments and insurers should handle what has become one of the more costly claims faced by insurers. (continued.)
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German insurance industry body GDV said providing better information to homeowners on the risks of damage from floods, heavy snow or landslides was better than creating a government-mandated program.
“Obligatory insurance is a last resort, and I would warn against introducing such a measure now,” GDV President Alexander Erdland told the conference.
Following the floods in southern Alberta, insurers have made premium changes to policies, and placed new requirements for policyholders.
In addition, the Alberta government earmarked $1.5 billion for flood mitigation and recovery programs over the next three years – in addition to a pledge from the federal government of $2.8 billion in flood relief.
The GDV says 99 per cent of all buildings can be insured privately, while only about one house in three has flood insurance.
The GDV represents 140 member companies including major industry players like
Allianz S.E., Munich Reinsurance Co. and Talanx A.G.
Lars Gatschke, representing the Federation of German Consumer Organizations at the conference, said introducing obligatory natural hazard insurance made sense as long as it was kept affordable and did not detract from efforts aimed at prevention.
