Mandatory disaster insurance “important topic” for Germany's Scholz after consecutive mass floods

A nationwide mandatory insurance against natural hazards will be “an important topic” at an upcoming meeting between Germany’s chancellor Olaf Scholz and the country’s 16 state premiers on 20 June. “The owners of houses and flats must be able to insure themselves against natural hazards,” Scholz said at a government address in parliament in the aftermath of mass floods affecting southern Germany. The debate about a mandatory natural hazard insurance cover already started more than one year ago, as extreme weather events led to damage across Germany and the rest of Europe and already resurfaced during another mass flooding in the western state Saarland in May. Scholz invited state governments to discuss mandatory insurance at their upcoming meeting. After having visited four different flooding disaster zones this year alone, Scholz said more frequent extreme weather and its consequences are “not merely a disaster, but the result of climate change.”

The chancellor stressed that adaptation measures, such as opening up lowlands around rivers which can absorb surplus water, are urgently needed and that his government remained committed to supporting the necessary works. However, a report by the newspaper Rheinische Post said that public funding for preemptive measures against flooding are far from being fully used by Germany’s state governments. About 40 percent of the 100 million euros available to anti-flooding measures was left unused in 2023, according to the newspaper who reviewed data provided by the agriculture ministry. 

Meanwhile, the government’s expert advisory board on consumer protection (SVRV) said that introducing a mandatory insurance would be legally practicable so long as consumers can freely choose among different insurance providers. The justice ministry recently voiced doubts over the legality of such a step. Homeowners often expcted state support if they become affected by natural disasters while simultaneously underestimating the risk of such an event occuring, Christoph Busch, head of SVRV, told the Neue Osnabrücker Zeitung. “Economists call this a charity hazard,” he said, adding that the current situation disincentivises people from insuring their property. Only about 54 percent of residential buildings in Germany are insured against the full range of natural hazards, which means that society must pay for a large part of the damages caused by disasters. “This is not sustainable for public budgets in the long-run,” Busch said. The SVRV said that preemptive measures in public infrastructure, as well as a “strict ban” on construction in areas prone to flooding, are the most effective measures that could be taken to minimise damage.