New compulsory insurance for homeowners: cost explosion due to climate change!

New compulsory insurance for homeowners: cost explosion due to climate change!

The new federal government made up of the CDU/CSU and SPD is planning to introduce mandatory natural hazard insurance for homeowners. Loud Tichy's insight This insurance is intended to take effect in the event of natural disasters and supplement regular residential building insurance. To date, existing residential building insurance does not cover damage caused by unforeseeable natural events. The introduction of this compulsory insurance is primarily justified by the increasing frequency of natural disasters as a result of climate change.

The costs for natural hazard insurance could vary significantly depending on the location, risk class and type of building. According to estimates by the Federal Ministry of Justice, annual premiums for homeowners could be up to 2,000 euros. This financial burden could be particularly hard on medium-sized business owners, as the costs will probably also be passed on to rents.

Context of natural disasters

The urgency for such measures has increased in recent years, particularly highlighted by the extreme weather events in Germany. Loud Experts.de There were numerous floods, devastating hurricanes and deadly heat waves in Europe in 2024. These incidents not only result in tragic losses but also pose challenges to the insurance system.

Current surveys show that less than 0.5 percent of all houses in Germany are considered to be at acute risk of flooding. On average, these houses have to expect one extreme weather event per decade. Nevertheless, this compulsory insurance is perceived as discriminatory and could be seen as redistribution to the detriment of the majority.

Global impacts of climate change

Damage from natural disasters is increasing at an alarming rate worldwide. In the USA in particular, forest and wildfires cause billions of dollars in damage every year. In early 2025, devastating fires struck around Los Angeles, destroying or damaging more than 12,000 buildings. These drastic events raise questions as to whether private property insurers are able to insure the damage without government help.

Market-based solutions do not appear to be sufficient to ensure comprehensive protection against the increasing risks posed by climate change. Similar extreme weather events are increasing in Germany, such as the 2021 floods in Rhineland-Palatinate and North Rhine-Westphalia, which is leading to a discussion about the need for comprehensive insurance protection against natural hazards.

Expectations are that climate-related damage in Germany could rise to up to 900 billion euros by 2050. In the event of severe climate change, the damage to infrastructure could even amount to up to 470 billion euros. Pressure on the insurance industry will increase as insurability becomes increasingly difficult in some regions due to climate change and more frequent extreme weather events.

Overall, both the political agenda around climate protection and the economic consequences of natural disasters represent an urgent challenge for Germany. The introduction of natural hazard insurance is not only seen as a necessary step towards precaution, but also as part of a more comprehensive security strategy for the future.