Recent European floods from a (re)insurance market perspective

A nearly stationary low-pressure system generated significant rainfall across central Europe in September 2024 resulting in life-threatening and costly flooding in Central and Eastern Europe. Catastrophic floods also struck southern Spain in October and southern Germany from late May to early June. These events marked an escalation in severity compared to 2023, which saw major flood events impacting Italy and Greece in June and September, respectively. This escalating pattern of widespread, severe flooding, coupled with rising financial losses and risks, has drawn significant attention from (re)insurers.

We present a retrospective on these events using the Gallagher Re Europe Flood Model, a pan-European flood catastrophe model designed to assess the potential financial impact of floods in terms of their magnitude and likelihood. By using quantitative indexes to compare observed flooding with thousands of stochastic event footprints included in the model, we show that a complementary qualitative analysis is necessary to identify the most representative events. This hazard-based analysis is than complemented by the estimation of financial losses. The results reveal a range of losses for near-similar events, reflecting the complexities involved in modelling the financial impact of flooding. These complexities include, but are not limited to, the granularity of the peril, the geo-localization of the exposure and the impact of flood defences. For example, by leveraging the flexibility of our model, we show an estimate of the financial implications for a (re)insurer should the defences have failed during the development of major events.    

In conclusion, while there is no control on the meteorological drivers of such events, our  analyses shows the relevance and importance of catastrophe models to support (re)insurers in targeted exposure management and improved risk assessment.