Little Grumbach in Dirlos in the Fulda district of East Hesse seems harmless. But when it rains heavily, the trickle becomes a problem for the residents in the depression through which the stream winds: in 2013 and 2018 there were floods here with extensive damage.
Resident Jutta Schäfer says she is “worried about climate change.” Because she expects more heavy rain and then more floods in the next few years. Today, people would no longer build in the floodplain, says Mayor Timo Zentgraf. However, relocating people is not an option.
Hundreds of thousands of buildings at risk
Dirlos is just one example of many. Around 400,000 residential buildings in Germany are in areas with a high risk of flooding. It's not just houses on rivers and lakes that are affected. Heavy rain can also affect buildings far away from bodies of water if large amounts of water cannot drain away quickly enough.
“Heavy rain can also occur where there is no river nearby,” says Anja Käfer-Rohrbach, deputy managing director of the General Association of the German Insurance Industry (GDV). As global warming continues, experts expect that heavy rain and floods will occur more frequently in the future. The risk of damage to buildings increases accordingly.
Insurance coverage remains patchy
Owners can protect themselves against such risks with natural hazard insurance. It supplements residential building insurance with protection against natural hazards such as floods or heavy rain. According to the insurance industry, around 57 percent of buildings currently have such protection.
While elementary insurance is often a given for new buildings, the insurance rate for existing buildings is stagnating. After natural disasters such as the flood in the Ahr Valley in 2021, interest in corresponding policies regularly increases. However, the effect usually doesn't last long. As the distance to the events increases, many owners' risk awareness decreases again. Käfer-Rohrbach speaks of “catastrophe dementia”.
Compulsory insurance for natural hazards has been discussed for years. A central question is whether the insurance industry can bear the growing risks in the long term. In a study, the Frankfurt economist Hartmut Nickel-Waninger comes to the conclusion that this is fundamentally possible. There are enough reinsurers to whom the risks could be passed on.
A look at the USA shows risks
However, there are examples internationally that show that insurability can have its limits. In the US state of California, some insurers have withdrawn from particularly vulnerable regions following severe forest fires. The background is increased damage and higher costs for reinsurance. Other states such as Colorado and Florida are also affected.
In mid-August, a group of anonymous industry insiders warned in an open letter of a scenario in which fewer and fewer buildings could be insurable. Insurers proceeded in three steps: First, premiums would be increased, then risks such as fire damage would be excluded and finally withdrawn entirely. This could also have consequences for the financial sector.
The extent to which extreme weather will increase in the future depends largely on climate protection. The UN environmental program UNEP warns that every additional tenth of a degree of warming beyond 1.5 degrees increases the risks. The world is currently heading for a 2.8 degree increase.
Warn and protect
In addition to climate protection, experts focus on prevention. Buildings would have to be better protected against heavy rain and flooding and new buildings would have to be planned to be more climate-resilient. In addition, if possible, construction should no longer be carried out in known risk areas. According to the GDV, around 1,000 to 1,500 new buildings are still being built in officially designated flood zones every year.
In the Fulda district there are now more than 180 sensors on bridges and roofs that use artificial intelligence to warn of heavy rain and floods. This means residents and the fire department can react more quickly and take protective measures. The investment is costly, but could pay off as extreme weather events increase.
