Climate change could make home insurance twice as expensive in ten years - industry

The premiums for insuring residential buildings could double over the coming decade in the face of increasing damages caused by climate change, the German insurance industry has warned. “If we do not consistently implement prevention and climate impact adaptation, we estimate that premiums for residential building insurance in Germany could double within the next ten years as a result of climate damage alone,” German Insurance Association (GDV) head Jörg Asmussen said. Extreme weather events such as floods and heavy rain are set to increase in frequency and become more severe as a consequence of climate change. Individual insurers will have to examine whether they can continue to insure against this and determine whether they can bear the corresponding risks, the GDV explained, adding that some insurers may sooner or later be forced to go out of business. “Without countermeasures, without prevention, this development will be directly reflected in insurance premiums,” Asmussen said.

The association recommends implementing measures for the prevention and adaptation to climate impacts, such as climate-adapted planning, building and renovation; stopping construction in flood-prone areas; making climate risk assessments for building permits mandatory; and a nationwide natural hazards portal to increase the risk awareness of the population.

In July 2021, heavy rains caused a flood disaster that counts among the worst in the country’s post-war history, with a death toll exceeding 200 people. While Germany is working on a national adaptation law, a lack of financial and human resources slows the implementation of preparation efforts against the impacts of climate change, and a fragmented approach is also considered a key hurdle. There is, however, a growing awareness that failing to act now will result in much greater financial and human costs in the future.