With parts of the Czech Republic, Poland, Austria, Slovakia, Hungary and Romania submerged, flood losses like those in 1997, 2002 and 2013 are possible that cost €2-€4 billion in 2023 values.
Charles Graham, Senior Insurance Analyst at BI, commented: “Torrential rain over Sept. 12-16 wreaked by storm Boris has brought widespread flooding to parts of central and eastern Europe which threatens to cost as much as the catastrophic floods of 1997, 2002 and 2013. With flood waters yet to recede, and other areas at risk as water flows downstream, it will be some time before the full cost can be assessed.
“Many areas have experienced exceptional rainfall in the past two years, suggesting that there may be a link between the increased severity of convective storms and rising sea-surface temperatures in the Mediterranean.
“The nonlife insurance markets in central Europe are highly concentrated and dominated by just a few insurers led by VIG, UNIQA, Generali and Allianz. In Poland, PZU is the sector's leader, followed by Warta (Talanx) and Ergo Hestia (Munich Re).”
UNIQA and VIG have the most exposure to recent floods, given their leading positions in Austria and a number of the affected countries, while PZU has a dominant market share in Poland, notes BI. Countries affected by the floods account for 80% or more of these companies' nonlife revenue. The relative exposures of Generali (at 15%) and Allianz's (5%) are far less, even though both have large market positions in some of the beset countries.
The share of the economic costs of the floods paid by the insurance industry will vary by country, adds BI. In Austria and the Czech Republic, flood insurance take-up is relatively high, so most of the insurable loss will probably be paid out by residential and commercial policies. In Poland, the bulk of commercial risk is covered, but only a small proportion of homes and autos are protected against floods.
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