Increasing demand for natural hazard insurance cover for church buildings

In 2024, building owners and the insurance industry worldwide will once again face major challenges. Natural disasters such as flooding, storms, hail and earthquakes have already caused considerable damage. What does this mean for churches as owners of numerous properties? Church buildings in Germany are usually insured against damage caused by fire, storm, hail and water pipes. But protection against damage caused by heavy rain or flooding increasingly requires additional natural hazard insurance protection.

Current events and forecasts for the future

Events such as the low-pressure system “Larissa” have hit Germany with heavy rainfall, thunderstorms and the resulting flooded cellars and streets. Particularly in spring, there were severe floods in North Rhine-Westphalia, Bavaria, Baden-Württemberg and Saxony. The weather conditions are extreme, and Germany is breaking heat records. Due to global warming, the risks and the potential for damage are constantly increasing. Heavy rain overwhelms the sewage system and small streams swell into rivers, leading to flooded cellars and even full ground floors. Church buildings, such as sacred buildings, parish and community houses, kindergartens, schools, etc. are also at risk. The consequences are often months of non-use of the premises, replacement rents, high repair costs or, in the worst case, rebuilding. Without insurance coverage, these costs place a heavy burden on budgets.

Extent of damage and financial impact

So far, floods in Germany have caused billions of euros in damage. Storm and hail damage is also on the rise. We have evaluated the reported storm damage under the church group contracts. This shows that more and more regions are affected and that the number of claims, as well as the costs of repair, are rising sharply. In the last 10 years, we have processed around 35,000 storm claims, 4,600 hurricane claims and 1,695 hail claims. Our claims database shows 184 claims this year alone due to flooding and backwater. The total damage runs into the millions, even though there is no comprehensive protection against natural hazards. You can read here about what to do in the event of damage.

Insurers' response to the increasing number of natural disasters

The increasing frequency and intensity of natural disasters poses a significant challenge for the insurance industry. Insurers have taken various measures in response to the increased damage and risks:
 

1. Increasing premiums and deductibles: Insurers have increased premiums for natural hazard policies to cover the increased claims expenses. Deductible models have been introduced and existing deductibles have been increased.
2. Risk assessment and adjustment: Insurers carry out comprehensive risk assessments, particularly in areas considered to be high-risk. Based on these assessments, it may be necessary to review existing insurance coverage and offer desired insurance coverage only to a limited extent. Natural hazards are now occurring in regions where it would have been inconceivable just a few years ago that the area would ever be flooded. Regular risk assessments are necessary to enable insurers to calculate their risk in the future.
    
3. Preventive measures: In individual cases, it is possible for insurers to carry out a local risk assessment and suggest preventive measures (e.g. flood protection systems). Furthermore, it makes sense to regularly check backwater valves to ensure that they are working properly. Preventive measures can reduce the extent of damage and increase the safety of buildings.
    

The German Insurance Association has published a guide to protection against flood damage and offers it free for download.

Conclusion

Climate change has led and will continue to lead to an increase in flood, inundation and heavy rain damage. Building owners and insurers must face up to these risks. Prevention options should be considered and implemented in new buildings or renovation projects.