Insured losses from Spain floods predicted 'well above' €1 billion
Morningstar DBRS: Some areas received a year's worth of rain in just eight hours.
Insured losses from extreme flooding in parts of eastern and southern Spain is predicted to rise well above €1 billion (or $1.09 billion), according to Morningstar DBRS.
Triggered by torrential rainfall on Oct. 29, 2024, flooding impacted the Spanish regions of Valencia, Albacete, Cuenca and eastern Andalusia. Morningstar DBRS said at least 95 people are confirmed dead, with widespread damage to property and infrastructure including people, properties, vehicles, businesses and the agriculture sector.
According to Morningstar DBRS:
- Part of the insured losses will be covered by the state-owned Consorcio de Compensación de Seguros (CCS), which manages the Spanish extraordinary risk insurance scheme.
- In Spain, the coverage of extraordinary risks, including floods and windstorms, is mandatory for any basic insurance coverage offered by private insurance companies.
- The CSS does not receive public funding, but it is ultimately funded by a surcharge to the policy premiums paid by policyholders.
The CSS is also expected to recover part of the insured losses related to the agricultural sector through its participation in Seguro Agrario Combinado (SAC). Meanwhile, the CSS confirmed it will cover damage to properties and vehicles attributable to flooding.
“As a result, we expect that the insured losses caused by the severe flooding will be mostly absorbed by the CCS,” Morningstar DBRS said. “Nevertheless, given the magnitude of the atmospheric events, we consider that the consequences for the private insurance and reinsurance sector will be consistent, with large claims undermining the underwriting profitability of Spanish insurance companies.”
In 2024, global insured catastrophe losses topped $100 billion for the fifth consecutive year. Losses were at $60 billion the first six months of 2024, 62% higher than the 10-year average for first half insured losses.
Catastrophes with major insurance losses in 2024 have included five U.S. hurricanes, severe flooding in central Europe, and wildfires in Canada.
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