Summer in panic: landslide leads to expensive damage and insurance drama!

Summer in panic: landslide leads to expensive damage and insurance drama!

The current ORF program “Citizens’ Lawyer”, moderated by Peter Resetarits, presents explosive cases that highlight the challenges of dealing with natural disasters and their consequences. An outstanding example is the natural disaster in the Lower Austrian community of Sommerein. Here the clayey soil is shifting a lot, which has caused cracks in several residential buildings. The renovation costs amount to hundreds of thousands of euros, and many of the affected properties could become uninhabitable. Despite the tradition in Austria of insuring against such damage, insurance companies refuse to cover it. This is due to vertical ground movements, which do not fall under the traditional definitions of landslides and are therefore not insured.

The affected residents are forced to take legal action against the insurance companies. A ruling by the Supreme Court states that insurance companies do not have to pay for the damage caused. This situation leads to fears that the residents of Sommerein could come away empty-handed. Experts discuss the legal situation and possible solutions for those affected in the studio.

Growing insurance gaps

The debate about insurance coverage is not new, and global figures show that insurance losses from natural disasters are rising rapidly worldwide. According to a report by Business Journal Total losses in 2023 were over $250 billion, of which only about $95 billion was insured. In Europe, the total damage amounted to ten billion dollars, with only eight billion dollars being insured.

This leads to an increasingly larger insurance gap. Many of those affected underestimate the risks or forego insurance coverage for financial reasons. Particularly in high-risk areas like California, insurance companies are withdrawing due to high premiums. In Austria, the effects of a lack of full insurance protection against natural disasters are particularly noticeable, as many people are left with the damage.

Legal changes in prospect

A new draft law passed last year provides for a disaster fund that could provide compensation for damage like that in Sommerein. However, it remains to be seen whether this fund will be activated in time to help people in need. States are increasingly having to step in, which puts an additional burden on public budgets. It is estimated that the difference between economic losses and insured losses was over $160 billion last year, underscoring the urgency of necessary adjustments to the legal framework.

The discussion about legally binding insurance against natural disasters in Austria is gaining momentum. Experts emphasize the need for education and adaptation strategies, such as better building regulations and early warning systems. Climate change, as the main cause of increasing insurance losses, also makes climate policy measures essential. The challenge of dealing with new risks such as cybercrime is reflected in the fact that less than 1% of cyberattack losses were insured in 2023.

The current situation in Sommerein and the increasing insurance losses worldwide illustrate the urgent need for global cooperation to eliminate the problem of sustainable insurance solutions.