PERILS updates insured losses from southern Germany floods at €1.590m

Zurich-based catastrophe insurance data provider PERILS has disclosed its second industry loss estimate of €1.590 million for the floods in southern Germany from 31st May to 6th June 2024.

This compares to the initial loss estimate of €1.568 million issued on 18th July 2024, six weeks after the event end date.

The estimate provided by PERILS is based on loss data collected from affected insurers, and in line with its coverage definition for Europe, covers the property line of business.

Christoph Oehy, Chief Executive Officer, PERILS, commented: “Insurance companies tend to base early loss estimates partly on insights from similar past events. If no such precedent exists, loss projections can be challenging, often leading to underestimates and subsequent revisions.

“In Germany, insurers have experienced several major recent flood events, with resulting insights potentially contributing to more robust early loss estimates for the Southern Germany Floods, and as a consequence a modest movement between the first two PERILS industry loss numbers. This is in marked contrast to events with no recent precedent, where loss development can be much more significant, such as the Kahramanmaras Earthquake in Turkey and the hailstorms in Italy in 2023.”

PERILS will disclose an updated estimate of the market loss from these floods on December 6th, 2024, six months after the event’s end date to accommodate industry loss footprint by CRESTA zone and Property lines of business.

As data suggests, Southern Germany experienced severe flooding in Bavaria and Baden-Wuerttemberg due to extreme rainfall locally surpassing 1-in-100-year levels, caused by a weather pattern known as a “Vb situation”, pronounced 5b.

During this time, low-pressure systems move north from the Mediterranean, bringing moisture that collides with cooler air over the Alps which can lead to heavy and prolonged rainfall and flooding over Central Europe.

PERILS explained, “In early June 2024, this weather pattern brought extreme rainfall over southern Germany. The rain fell on already saturated ground from an unusually precipitation-rich May, leading to significant flooding mainly in Bavaria and Baden-Wuerttemberg.”

The loss level for these floods was nevertheless not exceptional, given that it has exceeded three times since 2002, namely Elbe Floods 2002, Summer Floods 2013, and Ahrtal Floods 2021.

Oehy concluded: “The Southern Germany Floods is the 82nd Cat event we have covered since PERILS was founded 15 years ago. Among many other uses, this kind of industry loss data is used as triggers in insurance-linked securities and industry loss warranty transactions. In the last 15 years, the sum of all limits using PERILS as the industry loss reporting agency amounts to USD 23.6bn through 487 individual transactions.

“It is testament to the trust the markets put in us. The success of PERILS owes much to the willingness of insurers to provide us with their insured exposure and loss data for which we are extremely grateful. This enables us to provide high-quality industry data, providing valuable insights to better understand Cat risk.”

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