Compulsory insurance against natural hazards for property owners in Baden-Württemberg and North Rhine-Westphalia

Compulsory insurance against natural hazards for property owners in Baden-Württemberg and North Rhine-Westphalia

According to a report from www.swr.de, the federal states of Baden-Württemberg and North Rhine-Westphalia want to make insurance against natural hazards compulsory for property owners. A joint initiative should be presented to the Federal Council. The reason for the planned insurance requirement is the increasing number of extreme weather phenomena, which also lead to an increase in building damage. Currently, only around half of private properties nationwide are insured against natural hazards. In Baden-Württemberg, on the other hand, the proportion of insured people is over 90 percent due to previous compulsory insurance. Prime Minister Kretschmann is nevertheless pushing for uniform regulations across the country, as storms do not recognize national borders. Such compulsory insurance would also relieve the burden on public coffers, as the general public currently has to pay for aid in the event of natural disasters. A nationwide compulsory solidarity insurance is therefore necessary in order to be able to cover these costs in the long term. The insurance industry advocates an overall concept that includes prevention, adaptation to climate impacts and insurance. All residential buildings should be comprehensively insured against natural hazards; existing building insurance should automatically be converted to natural hazard protection. However, a legal basis is required for this. The state prime ministers want to discuss the issue at their meeting on March 16 and decide on further steps together.

The planned compulsory insurance for natural hazards for property owners can have a significant impact on the market, consumers and the insurance industry. Since all private properties must be comprehensively insured against natural hazards, the demand for natural hazard insurance will increase significantly. This could lead to an increase in premiums as insurance companies have to cover higher risks. At the same time, however, property owners have better protection against financial damage that could be caused by extreme natural events. Compulsory insurance can help to reduce the burden on public coffers, as the costs of claims assistance are redistributed from the general public to the insured. However, this could result in a financial burden for property owners. In order to make the switch to elementary protection for existing building insurance easier, a clear process should be defined for the automatic switch if customers do not object. This would help reduce the administrative burden on insurance companies and ensure that as many property owners as possible receive the protection they need. Overall, compulsory nationwide insurance for natural disasters is an important measure to reduce the financial impact of natural disasters on private real estate and to improve the protection of owners.

Source: According to a report from www.swr.de