According to the Advisory Council for Consumer Questions, basic insurance against natural hazards should become mandatory.

The Council is promoting this with new data and findings.

"Without compulsory insurance, for which there is a majority among those entitled to vote, too many buildings will remain uninsured and the owners will be dependent on incalculable state aid in an emergency," argues economist Gert Wagner, who is a member of the Advisory Council and co-author of the new study.

Katja Gelinsky

Business correspondent in Berlin

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The study, which the FAZ has received in advance, states that as a consequence of the flash flood in the summer of 2021 and because of the consequences of climate change, the legislature must improve the framework for the insurance protection of residential buildings against natural hazards.

Insurers and consumer advocates agree on this.

Less than half of residential buildings in Germany are still insured against natural hazards.

In Rhineland-Palatinate, the insurance density is only 37 percent.

After the floods in Rhineland-Palatinate and North Rhine-Westphalia, the conference of justice ministers decided that the working group "Compulsory insurance for natural hazards" should present a new report for the conference in June.

Increased insurance density with government help

The Advisory Council for Consumer Affairs supports the responsible federal ministry in shaping consumer policy, since the change of government that is the house of Federal Environment and Consumer Protection Minister Steffi Lemke (Greens).

For the political discussion, the committee compared the concepts available to date for expanding insurance cover: it compared its own paper from 2019 with newer proposals from the German Insurance Association (GDV) and the Federal Association of Consumer Organizations (VZBV).

As expected, the concept of the Advisory Council came off best.

There is agreement that an increase in insurance coverage can only be achieved with government assistance.

Financially weak households in particularly risky situations would otherwise be overwhelmed.

Overall, insurers and consumer advocates advocate a more market-based solution than the German Council of Economic Experts: In their opinion, an extension of residential building insurance should be offered as standard.

Homeowners should be able to choose not to.

There should not be an obligation to insure against natural hazards.

However, the VZBV wants to reserve the right to reassess if after a period of two years an insurance density of 80 percent has not yet been reached.

constitutional concerns

The experts, on the other hand, point out that many owners of residential buildings would apparently make a conscious decision not to take out insurance.

This is the result of the representative survey on the subject of insurance against natural hazards, which was commissioned for the analysis.

Accordingly, a narrow majority of those entitled to vote would accept compulsory insurance.

However, the survey also shows that there are very different opinions on tariff structure.

The Advisory Council takes this into account by only proposing compulsory basic insurance, which should be individually expandable.

The committee met legal concerns about the introduction of compulsory insurance with an expert opinion from the constitutional law teacher Thorsten Kingreen from the University of Regensburg.

Accordingly, the reform model of the Council of Economic Experts violates neither constitutional law nor European law.

It is true that compulsory insurance interferes with fundamental rights.

However, these interventions are justified, since many owners still lack risk awareness and there is a public interest in protecting the state coffers.