Insurers brace for one of Spain’s costliest events following October floods: Aon

The insurance sector is preparing for potentially one of Spain’s costliest events on record due to catastrophic flooding across eastern and southern regions that began on October 27, 2024, according to global insurance and reinsurance broking group Aon.

The event began with intense rainfall and severe storms in Almería Province on October 27-28, with areas like El Ejido and Dalías experiencing hailstones larger than 4 cm (1.6 inches).

Heavy rain continued across Valencia and Castilla-La Mancha from October 27-30, with Spain’s meteorological agency, AEMET, reporting over 300 mm (12 inches) of rain in parts of Valencia, Albacete, and Cuenca provinces. Some areas in Valencia received more than a month’s average rainfall in just 24 hours.

The downpours caused regional rivers, including the Turia, Júcar, and Magro, to overflow, while drought-stricken reservoirs reached or exceeded capacity, worsening flash flooding. Severe flooding affected Requena-Utiel, Hoya de Buñol, the Ribera region, and southern towns in the Valencia metropolitan area, with Torrent, Alacuás, Paiporta, and Catarroja among the hardest hit.

Thousands of residential structures were likely flooded, and damages are expected to reach at least hundreds of millions EUR. The flooding has also led to widespread disruptions, with power outages impacting at least 155,000 people, road closures on regional and national routes, and interruptions in rail services, including parts of the high-speed network. Business interruptions are also anticipated, including a production halt at the Ford assembly plant in Valencia and temporary closures of many other businesses in flooded areas.

The agricultural sector also faced significant losses. In the southern province of Almería, large hail caused considerable impacts across the municipalities of El Ejido and Dalías where more than 4,200 hectares (10,400 acres) of greenhouses sustained damage. Agroseguro initially expected heavy losses for persimmons, citrus fruits, and vegetables across Valencia, Murcia, Albacete, and Almería. The association of Valencian farmers (COAG) estimated that 35,000 hectares (86,500 acres) of vineyards and 5,000 hectares (12,400 acres) of almond trees may have also flooded in the Requena-Utiel region alone.

Preliminary estimates indicate that the overall economic impact could reach billions of EUR, covering damage to residential, commercial, and industrial sectors, as well as significant motor losses. The total impact also includes road repairs, building restorations, and productivity losses.

“As assessments continue and the event progresses in other regions of the peninsula, the insurance sector is bracing for potentially one of the costliest events in Spain on record,” Aon noted.

Insured losses will be covered by the Insurance Consortium (Consorcio de Compensación de Seguros) and private insurers, while agricultural damages will be covered through Agroseguro.

According to UNESPA (association of re/insurers), the insurance take-up rate for residential dwellings in Valencia Province is 77%, compared to a national average of 74%.

While most insurance payouts will likely go toward flood-related property damage, agricultural losses are also substantial, including hail damage in El Ejido, where municipal authorities estimate damage at approximately €100 million ($109 million).

Morningstar DBRS anticipates insured losses from this event to exceed €1 billion, considering the extensive damage to people, properties, vehicles, businesses, and the agriculture sector.

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