From 18 through 30 June 2021, severe thunderstorms, torrential rain and hail affected many regions in Baden-Württemberg, Rhineland-Palatinate, North Rhine-Westphalia, Saxony, Thüringen and Brandenburg:

• More than 50 litres of rain per square metre per hour fell in many areas.
• Thousands of vehicles and buildings were destroyed, and streets and cellars flooded.
• Cost estimates to repair the damages exceeded EUR 1 billion.

Less than two weeks later, on 12 July 2021, it started raining again and rain fell for eight consecutive days:

• The slow-moving, low-pressure system “Bernd” moved from France toward Germany from Bad Württemberg to Hessen, then to Saarland, then to the Eifel area.
• Rainfall totals reached as much as 240 litres per square metre.

Figure 1: German 2021 flood disaster rainfall by most affected areas¹

Source: Gesamtverband der Deutschen Versicherungswirtschaft, retrieved from https://www.gdv.de/resource/blob/71294/ebaad3ff1563be2b92e0dd0ce4c0751c/download-naturgefahren-report-data.pdf

One day later, on 13 July, the cities of Solingen, Hagen and Wuppertal flooded:

• The land was already saturated from the June storms and could not absorb the additional rainfall.
• Officials declared a state of emergency as highways flooded, cell phone towers were damaged, destroyed cars and caravans floated through flooded streets and hundreds of people died or went missing.

Damaged infrastructure hampered immediate rescue efforts and created a long, difficult road to recovery in the affected areas.² Four weeks later, highways and railway lines were still closed, leaving some areas inaccessible. People were not able to get to work and many local businesses closed, so volunteers worked to clean up the streets and help others with donations of food and clothing.³

Human loss

The devastating flood disaster caused more than 700 injuries and almost 200 deaths in Germany.⁴ More than a month later, many lives had not returned to normal. After the initial shock subsided, many people needed psychological counselling, especially those whose homes were destroyed and who lost all their possessions. Hotlines were set up to help the victims deal with depression and, in some cases, suicidal thoughts.⁵

Economic impact

Munich Re, one of the world’s leading reinsurers, estimates the total economic losses in Europe from the 2021 July flood disasters at EUR 46 billion, of which EUR 33 billion is in Germany.⁶ However, it will take time to completely understand and quantify the total economic impact to the German economy. The hospitality and retail sectors were hit particularly hard, after already suffering major financial losses due to COVID-19 lockdowns. Ironically, the rebuilding of homes and infrastructure could have a positive impact on the country’s gross domestic product (GDP) growth moving forward.⁷

Impact on insurers

The German Insurance Association (GDV) estimates the insured property damage caused by the July 2021 floods in Germany at EUR 7 billion. This makes it the most expensive natural disaster for German insurers in the last 50 years. The GDV attributes about:

• EUR 6.5 billion to losses of residential buildings, household contents and businesses.
• EUR 450 million to motor vehicles losses.⁸
• EUR 1.3 billion to more than 400 “major losses.” A major loss is defined as more than EUR 1 million for a single policyholder. Major losses are most common in the commercial and industrial sectors when buildings, machinery and equipment are damaged. The July 2021 floods created several major losses greater than EUR 20 million, for example in the hotel, chemical production and metal processing industries.⁹

Additional estimates of expected loss burdens to insurers include the following:

• In September 2021, BaFin, Germany’s Federal Financial Supervisory Authority, surveyed 136 German property and casualty insurers and 28 reinsurers impacted by the flood disaster. BaFin raised expected gross loss estimates for primary insurers to EUR 8.2 billion based on survey results.¹⁰
• In September 2021, Hanover Re estimated that the German flood disaster will cost insurers up to EUR 10 billion. Automobile damage was estimated at two to three times higher than normal average losses, and uncertainty around whether homes can be repaired or need to be demolished contributed to the increased costs.¹¹ Hannover Re estimates that its own costs will amount to EUR 200 million to EUR 250 million.¹²

Following this significant event, some insurers have reviewed their catastrophe cover for flood.

Claims reporting and settlement

The GDV reported that:

• Insurers paid approximately one-fifth of flood claims, about EUR 1.5 billion, within a few months of the event.
• About a month after the flood disaster, insurers had already paid advances of about EUR 700 million to their customers—with about EUR 500 million attributed to losses in the private sector such as residential buildings, household contents and motor vehicles, and almost EUR 200 million attributed to commercial risks.¹³

Outlook for the future

The German Weather Service and the 2021 Extreme Weather Congress published an extreme weather fact paper, which highlights the following:

• Temperatures in Germany have risen by 1.6°C between 1881 and 2021, significantly more than the global average. The rate of warming has increased significantly over the past 50 years, with nine of the 10 warmest years since the 1880s occurring since 2000.
• With unchecked greenhouse gas emissions, an increase of up to 20 hot days a year in Germany is expected for the period between 2031 and 2060. This poses an increased risk of forest fires and depleted levels of water in rivers to the extent that inland waterway vessels can no longer sail.
• However, heavy rainfall events can also become more frequent due to climate change. Scientists analysed the areas around the rivers Ahr and Erft, which have been particularly affected by extreme rainfall. Due to global warming, the intensity of extreme precipitation increased in these regions between 3% and 19%.
• Additionally, the number of violent thunderstorms is also increasing. Data from insurance companies show that the sums paid for losses after severe thunderstorms have been growing continuously for decades.¹⁴

Cities need to be better prepared architecturally for extreme weather events. However, national and international governments are also obliged to make changes.

For questions or more information on country-specific climate change and risk management, contact the author listed here or your usual Milliman consultant.

---

¹ GDV. Naturgefahrenreport 2021. Retrieved 11 March 2022 from https://www.gdv.de/resource/blob/71294/ebaad3ff1563be2b92e0dd0ce4c0751c/download-naturgefahren-report-data.pdf.

² NBC News (19 July 2021). Almost 200 dead, many still missing after floods as Germany counts devastating cost. Retrieved 11 March 2022 from https://www.nbcnews.com/news/world/almost-200-dead-many-still-missing-after-floods-germany-counts-n1274330.

³ CEDIM Forensic Disaster Analysis (FDA) Group. Hochwasser Mitteleuropa, Juli 2021 (Deutschland). Retrieved 11 March 2022 from https://www.cedim.kit.edu/download/FDA_HochwasserJuli2021_Bericht1.pdf.

⁴ NBC News, op cit. .

⁵ SWR (27 August 2021). Psychological help for the victims of the floods in the Ahr Valley. Retrieved 11 March 2022 from https://www.swr.de/swraktuell/rheinland-pfalz/koblenz/psychologisch-hilfe-fuer-flutopfer-ahrtal-100.html.

⁶ Merker.de (19 October 2021). Flood disaster could become even more expensive for insurers. Retrieved 11 March 2022 from https://www.merkur.de/wirtschaft/flutkatastrophe-koennte-fuer-versicherer-noch-teurer-werden-zr-91058492.html.

⁷ ING (18 July 2021). Germany: Economic and political impact of the floods. Retrieved 11 March 2022 from https://think.ing.com/articles/germany-economic-and-political-impact-of-the-floods.

⁸ Verscicherungs Money Focus (27 August 2021). Flood: GDV significantly raises loss forecast. Retrieved 11 March 2022 from https://versicherungsprofi.online/branche/assekuranz/flut-gdv-korrigiert-schadenprognose-deutlich-nach-oben_01399/.

⁹ Versicherungsbote (15 September 2021). GDV: July flood caused more major losses than ever before. Retrieved 11 March 2022 from https://www.versicherungsbote.de/id/4903294/GDV-Juli-Flut-verursachte-so-viele-Grossschaden-wie-noch-nie/.

¹⁰ BaFin (15 September 2021). Flood damage: Still no threat to existence. Retrieved 11 March 2022 from https://www.bafin.de/SharedDocs/Veroeffentlichungen/DE/Meldung/2021/meldung_
210915_ Rueckversicherer_Flutschaeden.html.

¹¹ SPIEGEL Economy (18 October 2021). Hanover Re expects costs of up to 10 billion euros for Insurers. Retrieved 11 March 2022 from https://www.spiegel.de/wirtschaft/flutkatastrophe-hannover-rueck-erwartet-bis-zu-10-milliarden-euro-kosten-a-f3a05ef1-4329-445d-8d6b-56fd7c302c28.

¹² NDR (5 August 2021). Despite flood damage: Hannover Re sticks to its profit forecast. Retrieved 11 March 2022 from https://www.ndr.de/nachrichten/niedersachsen/hannover_weser-leinegebiet/Trotz-Flutschaeden-Hannover-Rueck-haelt-an-Gewinnprognose-fest,aktuellhannover9144.html.

¹³ GDV (18 August 2021). Flood disaster in Germany: Insurers make advances of 700 million euros. Retrieved 11 March 2022 from https://www.gdv.de/de/medien/aktuell/flutkatastrophe-in-deutschland-versicherer-leisten-vorschuesse-von-700-millionen-euro--69718.

¹⁴ Extreme Weather Congress (24 September 2021). The coming disasters. Retrieved 13 March 2022 from https://www.spiegel.de/wissenschaft/natur/extremwetter-wie-sich-deutschland-auf-zukuenftige-naturkatastrophen-vorbereiten-sollte-a-fcf8ac1a-8265-4bcf-b040-c4154d13d386.