Wolfgang Kron

Flood

Flood catastrophes and the resulting economic and insured losses have increased significantly in the past decades. Suitable prevention strategies must embrace all aspects from the origins of floods to the avoidance of the loss potentials involved. This is a challenge not only to the insurance industry but also to the state and all those affected.

Along with windstorms, floods are the most frequent cause of losses from natural hazard events. About a third of all loss events and a third of the economic losses incurred worldwide are due to the effects of floods; almost half of all the people that were killed in the natural catastrophes of recent decades were the victims of floods.

The first years of the new century have already made one thing clear. All around the globe we have to reckon with more and more flood catastrophes. Of the many events that have occurred in recent times the largest were the floods in Mozambique (February 2000), the southern Alps (October 2000), England (November 2000), Texas (June 2001), central China (August 2002 and June 2003), central and eastern Europe (August 2002), southern France (December 2003), and India and Bangladesh (August 2004).

In global terms, the great flood catastrophes of the 1990s alone accounted for losses exceeding US$ 200bn. The decade figures clearly show a dramatic increase both in the number of losses and in the economic and insured losses, even if the figures for the last decade are lower than those for the 1990s.

But it is not just the large and spectacular events that generate losses; in fact, it may be assumed that, when added together, the many small and medium-size local floods account for at least the same loss amount again.

In contrast to windstorm losses, only a small proportion of flood losses are usually insured. One of the reasons for this is that the majority of the damage is to public facilities: roads, railway lines, dykes, river embankments, bridges, and other infrastructure installations such as the public water supply and sanitation.