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Floods: insurers draw lessons - Trends-Tendances sur PC

Floods, one year later: insurers learn lessons – Finance

Acceleration of extreme weather events, better supervision of the profession of expert, more targeted prevention and stronger collaboration between the sector and the public authorities in the face of systemic risks: the natural disaster of July 2021, the most serious in the country’s history, has led insurers to face new challenges.

From July 14 to 16, 2021, Wallonia experienced the worst flooding in its history: 209 municipalities (out of 262!) were hit by torrential rains. The province of Liège and the Vesdre valley are particularly affected: 39 people die, 100,000 people are affected, 15,000 households are left without gas, 66,500 without electricity and 47,000 under water. Thousands of freelancers and businesses are affected, or even completely out of order, and nearly 48,000 buildings (including 45,000 homes) and more than 11,000 cars are damaged. Finally, 559 bridges and 160 sports infrastructures were destroyed or damaged.

From July 14 to 16, 2021, Wallonia experienced the worst flooding in its history: 209 municipalities (out of 262!) were hit by torrential rains. The province of Liège and the Vesdre valley are particularly affected: 39 people die, 100,000 people are affected, 15,000 households are left without gas, 66,500 without electricity and 47,000 under water. Thousands of freelancers and businesses are affected, or even completely out of order, and nearly 48,000 buildings (including 45,000 homes) and more than 11,000 cars are damaged. Finally, 559 bridges and 160 sports infrastructures were destroyed or damaged. The drama is on an unprecedented scale. According to Assuralia, the federation of the insurance sector, it generated more than 75,000 claims, including more than 66,000 in Wallonia, for 7,400 in Flanders and 1,300 in Brussels. As for the total cost of the disaster, still according to figures from Assuralia, it amounts to… 2.5 billion euros! If the perception on the ground is that there is still a lot to do, insurers have not been idle. On the contrary. A year later, 90% of victims are (almost) fully compensated, which means that insurers have already paid 1.7 billion euros to the victims. At this stage, 75% of cases have been fully compensated. About 15% of the victims have been reimbursed almost in full (at least 80% of the costs) and only have to submit the last invoices to obtain reimbursement of the remaining 20%. In only 10% of cases, an agreement has not yet been reached. “That some files are still being processed is explained by several reasons”, explains Audrey Amiot, operations and transformation manager at Axa Belgium where around 15,000 files were opened following the floods. “Water damage takes longer than a storm, she says, in particular because you have to wait for the building to dry out in order to be able to make a correct assessment of the damage, even if there are cracks, if the stability is always insured, etc. In addition to this, there are certain second opinions which can delay the work, as well as the lack of manpower and with regard to construction materials, not to mention other parameters and factors. uncertainty, such as the publication of new maps of risk areas in the Walloon Region in order to reduce vulnerability by not rebuilding in certain areas if the risks remain high, which can also slow down the process”. That being said, underlines Audrey Amiot, “insurers have no interest in letting cases drag on longer than necessary. Especially in a context of high inflation and shortages of materials which only amplifies the cost of day-to-day compensation after day.” More broadly, the sector is learning several lessons. Taken as a whole, the figures are confirmation that “the frequency and severity of climatic events are increasing”, notes Audrey Amiot, specifying that “the cost of extreme climatic events is now increasing faster than global GNP”. In this context, adds the specialist from Axa Belgium, “we must put even more emphasis on prevention, in particular by using new technological tools (targeted weather alerts, data, etc.), in order also to “be able to offer a effective first aid”. Because internally too, “we learned a lot, in terms of mobilizing resources or speeding up compensation, for example”, confides Audrey Amiot. Above all, the claims caused by the floods of the The summer of 2021 also showed the importance of the role played by experts. But the profession needs better supervision. “The problem is that everyone can improvise as a counter-expert, explains the manager of Axa Belgium. There is no professional framework. Experts from insurance companies and external appraisal firms respect the rules of the game and play their role. But many individuals set up on their own and canvass the victims with an easy and tempting speech. They try to convince the victims by telling them that they have been taken in by their insurer and are trying to obtain higher compensation. In return, they take a commission. Such abuses are not acceptable. This causes a significant delay in the processing of files. A code of conduct is absolutely necessary to protect the profession and the insured.” Even more urgent is the establishment of a new legal framework for natural disasters. “The damage caused by the floods of July 2021 or the successive storms of February 2022 testify to the emergence of risks now considered systemic, argues Hilde Vernaillen, CEO of the P&V group and president of Assuralia. To maintain affordable premiums and ensure full compensation during the occurrence of such climatic events, it is imperative to provide sustainable solutions through the establishment of a more appropriate public-private partnership. In the absence of a partnership, full compensation for future large-scale natural disasters risks being compromised.” Indeed, the current legal framework in Belgium provides for intervention by the insurance sector capped at approximately 360 million euros per natural disaster. For larger amounts, the Calamity Fund intervenes. In Wallonia, however, the latter was no longer funded and was empty. This is why the agreement concluded between Assuralia and the Walloon government provides for a additional financial effort on the part of insurers who are doubling their legal intervention.For the surplus, i.e. a good billion euros, the Walloon Region has therefore borrowed money from insurers via an interest-free loan which will be repaid over eight years. , it is the insurers who advance the funds for the benefit of the victims and who so far pay everything. It is happy but untenable in the long term.”In Belgium, the risk of flooding is compulsory covered by fire insurance. It is a good thing for the population. But the risk must remain manageable for insurers. The short-term solution found to cover the flood disaster is not sustainable. This is why a public-private partnership is necessary”, abounds Audrey Amiot.

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