Flooding, climate change, and limited insurance coverage in the Netherlands

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As a country with a long history of flood risk, businesses with links to the Netherlands should understand the risks of flooding and the how climate change will continue to influence this. Ambiental offers the best flood data available on the market, enabling clients to comprehensively understand flood risk and how this impacts their business.

Flood risk in the Netherlands

Rising sea levels, increasing droughts and more extreme showers are the principal climate risks facing the Netherlands. Recognising this, the country has taken many preventative measures to reduce these risks and invested in strong flood defence systems. This includes the widening of riverbanks to reduce the risk of overflow, coastal protections, and an expansive network of dikes and levees.

The Delta Works – a system comprising 3 locks, 6 dams and 4 storm surge barriers – is the country’s largest flood defence system. Described by the English Environment Agency as “awe-inspiring”, the system directly responds to the Netherlands’ vulnerability to flooding from the North Sea.

Despite these preventative measures, it is still important to understand where at-risk areas are as flood events can still materialise. Most recently, countries across Western Europe, including The Netherlands, were taken by surprise when extreme flooding hit in the summer of 2021.

Noted as the wettest summer in the country’s history, the floods impacted various regions in the country and the Limburg province, in particular, had damage to both public and private property. Streams and rivers overflowed banks and the damage to the country was estimated to .

The flooding led to insurers receiving approximately 25,000 damage reports from Limburg and Brabant. In total, the Dutch Association of Insurers, Verbond van Verzekeraars, estimates the insured damage to amount to between €160 million to €250 million, with most claims concerning private damage to homes and vehicles. There was also damage to businesses such as company buildings and vehicles, as well as damage to government property, which is generally not insured.

Ambiental’s FloodMap for the Netherlands uses innovative software to provide highly detailed and accurate predictive data to outline how potential floods will develop. As leading flood consultants in flood risks assessments and flood adaptation solutions, Ambiental can tailor this service to customer needs, ensuring clients are prepared for flood risks before they materialise.

Insurance coverage for flooding in the Netherlands

In general, there is limited insurance coverage across the Netherlands. Royal HaskoningDHV conducted a study for the Dutch Association of Insurers last year, finding that while personal lines are often insured (although not for primary defences), there is usually no commercial coverage.

In the event of a flood in the Netherlands, damage can accumulate because floods may impact a large area in its entirety. There can be loss of life or injury, as well as damage to buildings and economic damage resulting from production and service failures at companies.

After the Limburg flood, due to there not being any insurance coverage available, the Dutch government stepped in with the Reimbursement for Damages due to Disasters Act (Wet tegemoetkoming schde bij rampen or "WTS"). However, it is at the Dutch government’s discretion as to whether the Act can be applied to a disaster. If it is declared to be applicable, partial compensation may be available from the government for both private individuals and companies. Notably, the government has said the Limburg flood is the last time they will apply the Act to an insurable flood event.

Now, the government expects the insurance market to come up with a sustainable solution instead.

It is therefore important that insurers understand which areas of the Netherlands might be at risk of possible future flood events. Ambiental offers a FloodScore database which can use optimal flood risk technology to identify both at-risk properties and country-wide flood risk information. This technology provides flood scores down to the property level which can be used by insurers to better understand and accurately price that risk.

Impact of climate change

Climate change is having a substantial impact on traditional weather patterns and the risk of extreme weather events like floods. In the Netherlands, it is already causing more frequent occurrences of peaks in rainwater and meltwater which then leads to a rise in the level of the rivers. It is also resulting in heavier and more extreme summer showers as well as increased risks of summer drought.

These changes increase the risk of extreme weather events occurring, which will increase the damage burden on insurers. If further mitigation measures are not taken to address the risks posed by climate change, the private damage caused by extreme precipitation and hail alone could double in the next few decades from the projected €125 million to €250 million

map of the Netherlands

Understanding the risks of flooding and the impact climate change has on this risk is vital for insurance companies and banks to understand how this affects their business. Insurers need the best data for their underwriting, pricing and claims management. Similarly, banks and investors need to understand the risk too, in addition to how insurance across the Netherlands is going to operate moving forward. This includes identifying what is insured, and what is going to be covered by the government as this impacts financing and portfolios.

Ambiental can provide comprehensive data outlining long-term risk to insurers, banks, and investors using the FloodScore Climate Suite. This data can help clients to identify areas vulnerable to change and deliver on reporting requirements. Providing a broad and accurate dataset, FloodScore Climate Suite encompasses not only flood risk analytics but also physical risks and transition risks.

The Netherlands has an extensive flood defence system but continues to face some flood risks. Since climate change is likely to increase this risk in the future, the limited insurance coverage across the country remains problematic for individuals and businesses which may be at risk from possible future flood events. caused by extreme weather events, Ambiental’s predictive data and flood risk technology can help to identify flood-prone areas, enabling clients to plan accordingly.

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Hazards Flood
Country and region Netherlands, the
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