Flood-hit German homes face higher premiums as climate risks grow

• Less than half German homeowners have flood cover.
• Higher premiums seen as climate change drives flooding.
• Uninsured households at risk of debt to fund clean-up.

By Arthur Neslen

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"Market risk premiums have to be balanced with the underlying risk," said Ernst Rauch from Munich Re, adding that higher premiums were likely within two years following the flooding that killed 191 people in Germany and Belgium.

"Driven by the changing risk situation it's almost a 'must' in order to maintain a sustainable insurance scheme long term," Rauch, chief climate scientist at the insurance firm, told the Thomson Reuters Foundation.

Many other homeowners could be forced to take on debt to repair the damage: Less than half of German households have specific flood insurance cover even as climate change drives more frequent and severe flooding, according to Munich Re.

Across Europe, about 65% of economic losses from natural disasters were uninsured in 2019, said the European Insurance and Occupational Pensions Authority, and the latest flood devastation has given impetus to reform calls.

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