Munich Re's damage balance sheet: "Flash floods and hurricanes will occur more and more frequently"

At the beginning of the new year, the clean-up work in the Ahr Valley is in full swing.

In the night of July 14th to 15th, a good 500 buildings were destroyed and 3,000 damaged, bridges were washed away and hundreds of kilometers of streets and railway lines were washed away.

The Ahr flood caused a great deal of suffering with 134 fatalities and the extent of the flood disaster and the costs of reconstruction are still not precisely foreseeable.

Henning Peitsmeier

Business correspondent in Munich.

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The total damage caused by the low pressure area "Bernd" in parts of Rhineland-Palatinate and North Rhine-Westphalia is estimated at 33 billion euros.

The German Insurance Association (GDV) specifies the insured portion quite precisely at 8.2 billion euros.

"Bernd" was thus the most expensive natural disaster in Germany to date.

"The pictures of the natural disasters of 2021 are disturbing," says Torsten Jeworrek, CEO of the reinsurer Munich Re.

“Climate research is increasingly showing that extreme storms have become more likely.

Societies urgently need to adapt to increasing weather risks and make climate protection a priority. "

$ 280 billion in damage

For a good four decades, the Munich reinsurance group, which in its own interest has to correctly assess risks and price them, has been recording major losses around the world and has published this annual balance sheet. Last year, inflation-adjusted losses of $ 280 billion were significantly higher than the previous year, when total losses of $ 210 billion were recorded.

For Ernst Rauch, who heads Munich Re's Corporate Climate Center, the catastrophe statistics for 2021 are striking in that many of the extreme weather events are among those that are becoming more frequent or more severe due to climate change. “Flash floods and hurricanes will occur more and more frequently, it can be assumed. We also observe an increase in the amount of damage in both cases, "says Rauch in an interview with the FAZ." However, hurricanes cause much more expensive damage. "

In the global statistics, storm “Bernd” is easily exceeded by hurricane “Ida”. The hurricane, which hit land south of New Orleans in late August, destroyed tens of thousands of buildings and was the most costly natural disaster of the year with a total damage of $ 65 billion - of which $ 36 billion was insured. At least the dikes withstood the storm surges. They were amplified in New Orleans after Hurricane Katrina in 2005. "Katrina" had caused catastrophic damage and floods in the coastal region at that time, which had killed almost 1,800 people. Since then, billions have been invested in flood protection in the state of Louisiana.

In this country, there is often a lack of sensitivity to natural hazards, says geophysicist Rauch.

Munich Re introduced geo research as early as 1974 and uses a world map of natural hazards to inform the public about risks to the economy.

"Unfortunately, there are still knowledge and information deficits in flash floods," says Rauch.

“We do have heavy precipitation studies, but these are regionally limited.

And the current flood hazard maps have only partially been supplemented by flash flood areas and the resolution must certainly be refined in terms of topography and rainfall runoff. " 

Ever more expensive damage years?

Scientists assume that both flash floods and hurricanes will occur more frequently in the future. Even if individual damage events cannot simply be assigned to climate change, as Rauch says, the statistics of the last decades still provide “plausible indications for a connection with the warming of the atmosphere and oceans”. In the insurance industry there is growing concern about ever more expensive loss years, if only because the insured values ​​are increasing.

Last year came close to 2017, when three severe hurricanes contributed to the fact that at 330 billion dollars, the second highest total ever recorded for natural disasters was incurred. Only 2011 with the Tohoku earthquake in Japan, including the Fukushima disaster, was even more costly with $ 355 billion in insured and uninsured damage.

For Munich Re, it is clear that adapting to the increasing risks posed by climate change will be a major challenge.

With the increase in damage, however, people's awareness of prevention could also grow, be it insurance cover or structural measures - a hope that geophysicist Rauch does not want to completely rule out.

With a view to the flash floods on the Ahr and Erft, he also says: “There was no lack of warnings.

But heavy rain has not yet been perceived by people as a real danger, unlike flooding on large rivers such as the Rhine and Danube. "