Modelled European flood risk continues to present a huge challenge for the market, with the average annual cost of flooding possibly increasing by up to 25% and 21% for countries such as Germany and France by the middle of this century, according to a report by JBA Risk Management and the World Bank Group.
According to JBA, between 1980 and 2020, the economic average annual loss (AAL) due to flooding in Europe is estimated to be EUR 12 billion.
The European Environment Agency highlights that this cost has progressively increased in successive decades; between 1980-1989 it was EUR 6.6 billion but from 2010-2019 it had grown to EUR 12.5 billion.
The observations were made as part of a commentary on the recent devastating floods which have caused extensive damage across wide parts of Northern Europe.
As of Monday 19 July, the death toll in Germany had reached 196 with a further 749 reported injured. A further 31 fatalities were reported in Belgium.
Between 12-15 July, a low pressure system stalled across Europe bringing excessive rainfall in a short period to a number of countries including Germany, Luxembourg, France, Switzerland, Belgium, Netherlands and Austria.
According to JBA, while it takes time to conclude if any specific weather event is linked to climate change definitively, the further warming of the atmosphere is lessening the contrast between Polar regions and the Equator:
“The consequence of this can cause a weakening of the northern hemisphere jet streams, which subsequently buckle and become more prone to trapping large high or low pressure systems in place for many days or weeks at a time.”
“This is being cited as the primary cause of the flooding in Europe last week. Similar effects of the weaker jet stream are linked to extreme weather events in Asia and North America, such as the extreme temperatures recorded earlier in the month in Canada. Whereas trapped high pressure regions bring drought and extreme temperatures, low pressure areas bring persistent high rainfall.”
JBA added that summer flooding in Central and Western Europe is not a new phenomenon and this latest event will draw immediate parallels to the devastating floods of 2002 and 2013, which resulted in economic losses of between $13 and $16 billion respectively.
Given that insurance penetration is relatively high among Central European nations, insured losses for the same historic events were estimated to have cost the industry around $3.4 and $3.9 billion for the 2002 and 2013 floods respectively.
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