Compulsory insurance against natural hazards: Financial experts warn of risks that threaten your existence

Compulsory insurance against natural hazards: Financial experts warn of risks that threaten your existence

According to a report by www.ak-kurier.de, continuous rain has caused rivers and streams to overflow their banks in many places in Germany. Due to climate change, it must be expected that such extreme weather events will increase. The Rhineland-Palatinate consumer advice center therefore requires compulsory insurance against natural hazards. This demand is also supported by the Prime Ministers of the particularly affected states of Lower Saxony and Saxony-Anhalt. The Federal Council has already decided on compulsory insurance against natural disasters, but the insurance rate is still low.

In fact, the insurance rate in Rhineland-Palatinate has only increased slightly since the devastating floods on the Ahr in 2021, and nationwide only 52 percent of buildings are insured against natural risks. Many people believe that they have to pay unaffordable insurance premiums in high-risk areas. However, the consumer advice center argues that even in areas that are not directly on rivers, extreme weather events can cause major damage. The Rhineland-Palatinate consumer advice center is therefore calling for a political solution and supports the demand for nationwide compulsory insurance against natural hazards.

Critics warn of high insurance premiums, but the consumer advice center believes that such compulsory insurance does not necessarily have to lead to unaffordable premiums. A look at France shows that a combination of mandatory private property insurance and state reinsurance can lead to affordable insurance premiums. However, as long as there is no compulsory insurance, homeowners should check their insurance cover against natural hazards and adjust it if necessary.

This requirement for compulsory insurance against natural hazards could have a strong impact on the insurance market. Increased demand for insurance would likely affect insurance premiums. It could also lead to insurance companies developing new products to meet the requirements of compulsory insurance. However, consumers could also benefit from greater security and better protection against natural disasters. Ultimately, the introduction of compulsory insurance could help ensure that more buildings are insured against natural hazards and reduce the financial burden in the event of damage.