BAU-I-5: Claims expenditure for property insurance

The picture shows piled up heavily soiled boards and windows. On top of the pile is a cuddly toy dog completely covered in mud.Click to enlarge
Nowhere near the total of buildings have so far been insured for risks of floodwater damage.
Source: Photograph: © Mykola /

2019 Monitoring Report on the German Strategy for Adaptation to Climate Change

Table of Contents


BAU-I-5: Claims expenditure for property insurance

Damage caused by storms and hailstones as well as damage due to weather-related natural hazards such as flooding after heavy rainfall and floodwater lead to high costs incurred by insurance companies in respect of property insurance. The time series examined is strongly marked by extremely severe individual weather events. So far, it has not been possible to identify a significant trend for claims expenditure in property insurance.

The stacking column diagram shows the claims expenditure in billions of euros in property insurance (windstorm and hail) in relation to the portfolio and prices in 2017 for 1970 to 2017, and also the claims expenditure in property insurance (natural hazards) in relation to the portfolio and prices in 2017 for 2002 to 2017.
BAU-I-5: Claims expenditure for property insurance

The stack column diagram shows the claims expenditure in billions of euros in property insurance (windstorm and hail) for 1970 to 2017 in relation to the portfolio and prices in 2017, and also the claims expenditure in property insurance (natural hazards) for 2002 to 2017 in relation to the portfolio and prices in 2017. From 1990 onwards, there are clear peaks in 1990 and 2002 with almost 9 billion euros, as well as in 2007 and 2013. There are only minor fluctuations between these years. Before 1990, there were larger losses in 1972, 1976 and 1984. In both cases, there is no trend.

Source: GDV

High weather-related damage in terms of property insurance

According to the current state of scientific knowledge, collated by the IPCC in its 2018 Special Report entitled ‘Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation’, progressive climate warming will change the intensity, incidence, spatial expansion and duration of extreme weather events. It is to be expected that in future, apart from other events, more extreme heavy precipitation events will occur with greater frequency and intensity thus causing flooding. As far as the development of the incidence and intensity of storm events is concerned, it has not been possible to discern a distinct trend for Germany. Likewise, other than with regard to temperature, projections into the future have remained difficult. Nevertheless, several scientific studies have shown meanwhile that the violence of the most vigorous storms and consequently, the extent of storm-related damage, will increase. Winter storms are becoming particularly violent. Friederike was the last of five destructive hurricanes of the 2017/2018 winter season. In Germany, they claimed the lives of 21 people and caused damage to property worth more than 1 billion Euros.

Weather-related extreme events can damage a building’s envelope and the interior of a building. Typical storm damage to buildings includes e.g. torn-off roof tiles and ripped-off parts of cladding as well as broken glass panes in windows or doors. Indirectly buildings can be affected by fallen or broken trees and masts or by damage to buildings in the neighbourhood. Compared to their size, hailstones can have enormous powers of impact capable of damaging roofs, window panes or facings. Especially if water penetrates to the interior of buildings – either due to floodwater or heavy rain – this can also cause considerable damage to buildings’ contents, in particular to household effects. In the case of such extreme events, the damage caused to a single one-family house can cause claims for more than 100,000 Euros worth of damage.

The extent of damage to buildings and their interiors caused by extreme events is reflected by the amounts of money involved in claims settled by the insurance industry. In particular with regard to high insurance densities as e.g. in the insurance of private buildings against storm and hailstorm damage (in view of 94 % density, it would be correct to speak of near-saturation of the market), even regionally limited damage events are reflected well in statistics. Any change in reported claims and associated damages settled by insurance companies with policyholders can therefore be linked directly to changes in the frequency and intensity of damage events.

In respect of damage covered by customary property insurance, the amounts claimed due to fire, lightning strike, explosion and tapwater have remained more or less consistent over the years. In cases of storm and hail damage and other natural events, caused by earthquakes, landslides, subsidence, snow pressure or avalanches as well as flooding due to a river breaking its banks or heavy rain, damage amounts fluctuate strongly from year to year. In some years damage events can be cumulative as a function of weather patterns, and some, particularly violent events can cause major damage. By comparison, other years are relatively ‘quiet’.

Included in claims expenditure for property insurance – apart from private residential buildings and their household effects – are also commercial and industrial premises and associated contents as well as operational interruptions due to damage events. This expenditure covers payments and provisions for any damage caused in the relevant business year including any expenses for claim settlements. Regarding the time series, the stock and prices valid in 2017 were extrapolated in order to offset any inflationary effects or changes regarding the stock insured and to permit a comparison of the figures recorded for individual years.

The time series examined with regard to claims expenditure for property insurance has so far not shown any significant trend either for damage from storm, hailstones or other natural events. However, from time to time there are years when individual extreme events push up the claims expenditure. After the turn of the millennium this applies in particular to 2002 when the August floodwater as well as several hurricanes (especially hurricane Jeanett) caused massive damage. In January 2007, the low-pressure system Cyril affected public life in large parts of Europe claiming 47 lives. In late February 2010, the low-pressure system Xynthia caused damage in Germany totalling 500 million Euros. In 2013 there were as many as four major hailstorms which pushed up the total amount of claims: Manni and Norbert in June as well as Andreas and Bernd in July with focus on Lower Saxony and Baden-Württemberg. In addition, the June floodwater in the same year caused damage totalling 1.95 billion Euros.



WW-I-3: Floodwater

BAU-R-5: Insurance density of extended natural hazard insurance for residential buildings



Active management of risks and opportunities by banks and insurance companies (DAS, ch. 3.2.10)

Supporting the personal provision of floodwater protection (DAS, ch. 3.2.3)

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