Compulsory insurance for homeowners: Merz wants to curb climate risks!

Compulsory insurance for homeowners: Merz wants to curb climate risks!

The black-red government under Chancellor Friedrich Merz (CDU) is planning new compulsory insurance for homeowners in order to meet the challenges of climate change. This was reported by the Hersfeld newspaper. As part of this initiative, new building insurance policies will in future include natural hazard insurance. The aim is to increase protection against natural events, which have increasingly occurred in Germany in recent years.

The aim is for existing contracts to be expanded to include elementary insurance by a certain deadline. According to a survey by the Ifo Institute, which was carried out among more than 8,000 households and 639 companies, 39% of Germans support mandatory natural hazard insurance, while 27% are against it. Many households prefer solidarity insurance and view it as fairer than ad hoc state aid.

Background of the discussion

A new attitude towards compulsory insurance can be observed, particularly in areas with a low risk of flooding. This development arose against the background of the devastating Ahr Valley disaster in 2021 and the floods in southern Germany in 2024, which brought the topic into acute focus. The Federal Council requires compulsory insurance because 99% of properties have residential building insurance, but less than half are insured against natural hazards. The flood disaster in the Ahr Valley caused damage of over 40 billion euros, although only around half of the residential buildings were covered by natural hazard insurance.

Many experts consider planning compulsory insurance to be useful in order to provide financial protection against climate-related damage. The integration of flood and heavy rain protection into building insurance is also part of the coalition agreement between the Union and the SPD. It is also mentioned that in Germany only around 50% of buildings are insured against natural hazards such as floods, and in Lower Saxony it is only just under 30%.

Criticism and alternative approaches

However, Federal Justice Minister Marco Buschmann (FDP) rejects compulsory insurance and instead relies on educational campaigns to increase voluntary insurance coverage. The Federal Ministry of Justice (BMJ) argues that compulsory insurance does not reduce the probability of natural damage occurring and could create additional bureaucracy. The costs for natural hazard insurance can range between 100 and 2,000 euros annually, depending on various factors.

In recent years, homeowners insurance premiums have already increased by around 15% and are expected to increase by a further 7% in 2024. The General Association of the German Insurance Industry (GDV) also expects insurance premiums to double in the next ten years due to climate impacts. This aspect raises additional questions about financial viability for many households, as many of those affected by floods and heavy rain in particular cannot afford or do not have access to voluntary insurance coverage.

The discussion about compulsory insurance has been intensive since the Ahrtal disaster, and a federal-state working group on natural hazards was set up to examine options for increasing natural hazard insurance. The calls for nationwide compulsory insurance are supported by various states and the Green Party and criticize the BMJ for supposed inaction.