Verisk’s AIR Worldwide Estimates Insured Losses for July Floods in Germany Could Approach EUR 5 Billion

Rhea-AI Summary

AIR Worldwide, a Verisk (Nasdaq:VRSK) business, estimates that the recent flooding in Germany could lead to insured losses approaching EUR 5 billion. The flooding, caused by low pressure system 'Bernd' from July 13 to 18, primarily affected the Rhineland-Palatinate and North Rhine-Westphalia regions, resulting in significant damages to homes and infrastructure.

The flood's impact has extended to other communities and could delay restoration efforts for weeks or months, potentially affecting loss inflation.

Positive

• Loss estimates provide clear financial data for reinsurance and insurance sectors.
• AIR Worldwide's advanced risk modeling adds credibility to the damage assessments.

Negative

• Expected insured losses could significantly impact the financial performance of insurance companies.
• Extended restoration times for infrastructure may lead to prolonged economic disruptions.

BOSTON, July 28, 2021 (GLOBE NEWSWIRE) -- Extreme event modeling firm AIR Worldwide estimates insured losses in Germany from July flooding could approach EUR 5 billion. AIR Worldwide is a Verisk (Nasdaq:VRSK) business.

Low pressure system “Bernd” parked itself over central Europe and brought about significant flooding from July 13 to 18. Germany’s Rhineland-Palatinate and North Rhine-Westphalia regions were particularly affected, experiencing heavy and, in some cases, historic rainfall amounts, with the border region between the German states of Bavaria, Thuringia, and Saxony being affected by localized flooding as well.

Impacted German rivers with notable gauge readings include the tributaries of the Mosel and Rhine rivers, some of which reached historically high levels. One area that was especially hard hit is the Ahr valley, which is named after the Ahr River, a left tributary of the Rhine River in Germany. All along the Ahr River, homes were flooded and bridges were broken; in the village of Schuld most buildings were destroyed.

Also heavily affected were the mountainous areas in the border region between the southeasternmost region of Germany and the Austrian states of Salzburg and Tirol. Affected communities include Hallein, Kufstein, and various communities in the region of Berchtesgaden. Communities in the German state of Saxony were also affected—especially in the mountain range Saxon Switzerland.

The restoration of infrastructure such as water and gas pipes, power lines, and roads could take weeks or even months, according to some estimates, which could lead to loss inflation effects.

To produce the loss estimates, AIR analyzed hourly precipitation fields over Germany derived from NASA’s Global Precipitation Measurement (GPM) system during July 5 to 19. Daily observed rainfall data from over 1,600 gauging stations, obtained from the Climate Data Center at Deutsche Wetterdienst (DWD), was also assimilated to improve the quality of the GPM precipitation input. As the vast majority of losses for this event within Germany came from the catchments of the Rhine and Danube basins, the loss estimate is limited to these two river basins within Germany.

River flow data from more than 900 gauging stations in the Rhine and Danube river basins within Germany, obtained from country’s provincial and federal agencies, was used to calibrate and validate the modeled flows.

Included in AIR’s estimates are losses to insured physical damage to property (residential, commercial, industrial, auto, agriculture), both structures and their contents, from both on- and off-floodplain flooding. Other countries and regions that experienced flooding include Belgium, Switzerland, Austria, Luxembourg, and the Netherlands’ southernmost province Limburg, but these regions are not included in AIR’s loss estimate.

AIR notes that many reinsurance contracts are subject to an hours clause (typically 504 hours for flood events). Given the duration of this event, AIR expects the flood to be treated as a single occurrence in Germany.

About AIR Worldwide
AIR Worldwide (AIR) provides risk modeling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modeling industry and today models the risk from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber incidents. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, longevity modeling, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk (Nasdaq:VRSK) business, is headquartered in Boston, with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.

FAQ

What are the estimated insured losses from the July flooding in Germany by AIR Worldwide?

AIR Worldwide estimates that insured losses in Germany from the July flooding could approach EUR 5 billion.

Which regions in Germany were most affected by the flooding in July?

The Rhineland-Palatinate and North Rhine-Westphalia regions were particularly affected by the flooding.

How did AIR Worldwide produce their loss estimates for the flooding in Germany?

AIR Worldwide analyzed hourly precipitation fields from NASA and daily rainfall from over 1,600 gauging stations to produce their loss estimates.

What is the significance of the hours clause in reinsurance contracts related to the flooding?

Many reinsurance contracts include an hours clause, and due to the duration of this flooding event, it is expected to be treated as a single occurrence.

Which other countries experienced flooding alongside Germany during this event?

Other countries affected by flooding included Belgium, Switzerland, Austria, Luxembourg, and the Netherlands.