Insurers take next step in insuring flooding by large river or sea

Insurers are working on a solution for compensation for damage if a large river such as the Meuse river crosses the dikes. Or in an even worse scenario: if the seawalls fail. A so-called public-private international reinsurance pool is envisaged in which reinsurers also share in the risk of damage. The Association will further develop this construction together with the industry in the coming year, according to the Members' Meeting of the Association.

The chance that a large river will cross the dikes, or the sea will enter the country, is small. But for those moments when things unexpectedly go wrong, damage limitation and quick recovery are crucial. Fortunately, we have very good dikes in our country and space has been created for the large rivers. As a rule, private individuals are also well insured against damage caused by flooding of smaller rivers and streams, storms, hail and, for example, snow through their home and contents insurance. But not yet for a flood of the Meuse, IJssel, Rhine or sea, the so-called primary barriers. "Several insurers will share the flood risk together," says Maurice Koopman, member of the General Sector Board and CEO NN Non-life at NN.  For example, through a so-called public-private international reinsurance pool in which reinsurers also share in the risk of damage. For the time being, the construction is aimed at private customers. At a later stage, the Association wants to see whether a proven construction can be extended to SMEs.

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Because insurers have the 'know-how' in-house to help SMEs, as in Limburg. Koopman: "In addition to the private solution, we would also like to discuss with the government whether insurers can be the counter for government compensation for damage to goods and buildings. The aggrieved entrepreneur can then simply contact his own insurer or intermediary, who can immediately give tips to limit damage and to get back on his feet as soon as possible. This way you prevent a lot of follow-up damage and that entrepreneurs are sent from the cupboard to the wall."

Collaboration needed

The Associations move to further develop a coverage proposal follows previous initiatives that have failed for various reasons. For an additional insurance to which all Dutch people contribute, broad support among the population is needed, the Association realizes. In order to increase support, the Association is also looking at whether the amount of the premium surcharge can depend on the flood risk. But in all insurance initiatives, the Alliance needs the government. Not only to be able to work together, but also to increase awareness and prevention among citizens and from a possible financial participation from the government. That is why the Association now contributes to various ministerial processes:

• The policy table on flooding and flooding (under the direction of the Ministry of Infrastructure and Water Management,
• The evaluations of the scheme and the Disaster Compensation Act under the direction of the Ministry of Justice and Security
• A policy study by the Ministry of Finance on the insurability of climate change.

The Dutch Association strives for an implementation date of 1 January 2025, but whether this date is feasible also depends on (political) processes outside the Association. This year (2023) will be used to come up with a proposal with various options, which serves as a basis for discussions with the government, social parties and reinsurers.