Insurance is there to protect people from danger.

Bicycle and household contents insurance help when thieves strike, elementary insurance when the forces of nature are raging.

In the case of the floods in North Rhine-Westphalia and Rhineland-Palatinate, this principle failed: According to estimates, around half of the flood victims were not insured against floods.

Either they didn't want insurance or they couldn't get an affordable one.

The free market in its current form leaves gaps - there is no obligation for elementary insurance in Germany.

As a result, the state is now rescuing all those affected with a lot of tax money.

Henning Peitsmeier

Business correspondent in Munich.

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Johannes Pennekamp

Responsible editor for economic reporting, responsible for “Die Lounge”.

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First there is at least 400 million euros in emergency aid.

In addition, a billion-dollar fund is planned, from which the insured and non-insured will likely be served.

Anyone who asks critically whether those who have prepared for a disaster are now the stupid ones because they have spent a lot of money on their policies, but now everyone else is being saved financially, cannot hope for the understanding of the Federal Minister of Finance Olaf Scholz.

"I advocate not being cynical, not being heartless," said the campaigning Social Democrat on Wednesday.

"The simplest solution would be compulsory insurance"

It was also the prime minister of his party who wanted to remove the false incentive not to take out insurance because of the prospect of a state rescue. On June 1, 2017, the heads of government of the federal states passed the resolution that in future "only those who have unsuccessfully sought insurance or who were only offered this on economically unreasonable terms can count on state support beyond so-called emergency aid". Bavaria went even further in 2019 and announced that it would no longer pay emergency aid if floods caused damage after heavy rain. There should only be exceptions for cases of hardship.

In view of the catastrophic conditions in the flood areas and the many fatalities, there is understandably no longer any talk of this in politics - because the need is palpable. "In case of doubt, such voluntary commitments are worthless," says Andreas Richter, professor at the Institute for Risk Management and Insurance at LMU Munich.

In the future, therefore, the question arises as to how it can be prevented in future that taxpayers are liable for the damage instead of insurance.

“The simplest and best solution would be compulsory insurance,” says Berlin economist Gert Wagner.

Insurance specialist Richter is also a fan of this model.

"I am of the opinion that anyone who builds a house should correctly calculate all the costs that may arise - including risk-based insurance premiums for flood protection if you are building close to an endangered area," says the researcher.

Between 5 and 50 euros a month

As with motor vehicle liability, property owners would then have to insure themselves against the consequences of heavy rain and other natural disasters. “Such a solution would be cheaper for the state and, above all, would give each individual security as to how much money they will receive in the event of damage,” says economist Wagner. The costs of insurance, especially if they should rise due to climate change, are "a constant incentive for politics and society to discuss how to keep or reduce costs through a sensible climate and building policy".

Two years ago, Wagner set out what the model could look like in detail in an analysis by the German Advisory Council on Consumer Issues. The central points: Firstly, compulsory insurance should not be an “all-round carefree package” and, secondly, it should be accompanied, for example, by structural measures that protect against the consequences of natural forces.