Flood risks on the rise
Underestimated natural hazard, devastating damage
Losses caused by flood events 2021: Only some 22% were insured
Overall losses: US$ 90bn
In the long term, only storms cause even more losses worldwide than floods. What’s more, climate change is increasing the probability of extreme precipitation in many regions, which will lead to more frequent flash floods and disastrous flooding.
The comparatively low share of insured flood losses even in industrialised countries is partially due to a limited range of insurance covers in some regions and low demand, even in places known to be at risk of flooding. In addition, many losses involve public infrastructure – such as roads, railways, dykes, riverbeds and bridges – which is usually uninsured.The comparatively low share of insured flood losses even in industrialised countries is partially due to a limited range of insurance covers in some regions and low demand, even in places known to be at risk of flooding. In addition, many losses involve public infrastructure – such as roads, railways, dykes, riverbeds and bridges – which is usually uninsured.
Climate change is exacerbating the risk situation
Floods and landslides in Thailand in 2011 resulted in the highest flood losses of all time
Rising temperatures of the atmosphere and sea surfaces are influencing precipitation patterns. Warmer air can absorb more moisture, which increases the potential for heavy rainfall. Numerous scientific studies analysed by the Intergovernmental Panel on Climate Change (IPCC) indicate a likely rise in extreme flash floods and river floods in many regions. Scientists believe that climate change is also at least partially responsible for the sheer scale of the latest catastrophic flooding in Europe, following on the heels of extreme rainfall in July 2021 that mainly hit Germany.
At the same time, flooding is regarded as the natural hazard against which precautionary measures are most effective. In several regions, like China, there are indications that protective measures have reduced adjusted losses.
Flooding from an insurance perspective
Flash flooding occurs when the ground stops absorbing water during brief but torrential rainfall. Thunderstorms often cause flash floods. On sloping terrain, this can trigger a rapidly rising flood wave capable of quickly flooding dry land where it has not even rained. On flat terrain, the floodwater accumulates in lower-lying hollows, basements and underground car parks. The potential for erosion and the mechanical forces associated with the high rates of flow both play crucial roles, as they can make buildings collapse and cause enormous losses.
Many people are unaware that flash floods can occur almost anywhere – even far away from rivers. In addition, it is nearly impossible to predict flash flooding. This makes short-term loss reduction measures essentially impossible.
Prevention and insurance solutions for water-related risks
Accurate risk assessments based on precise flood zones are needed to calculate insurance covers. A combination of preventive measures and insurance can minimise the overall financial burden.
To protect against flooding, many dykes, flood walls and retention basins are built along rivers. Loss prevention at an individual level involves measures to improve the flood resilience of buildings and structures. Natural hazards insurance is the ideal way to counter the risk of flooding far from rivers and coasts. Nevertheless, policies should primarily cover the losses that can severely hit or even ruin policyholders. At the same time, such insurance must not reduce their willingness to take suitable precautions