In September 2024, Central Europe was hit by devastating floods caused by Storm Boris. Countries such as Austria, Poland, the Czech Republic, and Romania saw thousands of people evacuated, with considerable material damage. Initial estimates put the economic losses at between €1.6 and €2.34 billion. However, thanks to massive investments in protective infrastructure and proactive risk management, insured losses have been significantly reduced.
This event highlights the need for large companies to adopt insurance optimization strategies, particularly in the P&C (Fire, Accident and Miscellaneous) insurance segment. As climate risk becomes increasingly pressing, it is essential to integrate specific risk analyses into insurance contracts in order to ensure adequate coverage while controlling costs.
The September 2024 floods highlighted the progress made in natural hazard management in Central Europe. Unlike the catastrophic floods of 1997 and 2010, losses in 2024 were mitigated by modernized infrastructure and preventive measures such as predictive reservoir management and dike reinforcement.
For example, in the Czech Republic, dams along the Vltava River were emptied in advance to cope with the rising waters, protecting major cities such as Prague. In Austria and Poland, reinforced infrastructure also helped minimize damage in urban areas. These measures show that prevention, combined with optimized insurance coverage, can significantly reduce losses for companies and insurers.
The increasing impact of natural disasters, such as the 2024 floods, is leading to an increase in insurance premiums, particularly in high-risk areas. Insurers are adjusting their rates based on the increased frequency of extreme weather events. Companies must therefore anticipate these increases by regularly reviewing their insurance contracts and optimizing their coverage.
Investments in prevention infrastructure also make it possible to negotiate more advantageous premiums. For example, companies that implement risk management plans, such as early warning systems and resilience measures, may be considered less risky by insurers, which translates into lower costs.
Faced with the increase in extreme weather events, it is imperative that mid-caps and large groups adopt proactive strategies to better manage their risks and optimize their insurance. Here are some key strategies:
Regular review of insurance contracts: It is essential to regularly assess guarantees and exclusions to ensure that coverages meet current risks without including obsolete guarantees.
Negotiate deductibles: Companies can consider increasing certain deductibles, thereby reducing their insurance premiums while maintaining adequate coverage.
Invest in prevention infrastructure: Implementing resilience measures, such as water management systems, not only reduces risks, but also allows for more advantageous terms to be negotiated with insurers.
Regular tendering with insurers: Putting insurers in competition allows for the best terms and to take advantage of market developments in P&C coverage.
The 2024 floods in Central Europe are a reminder that natural disasters are a reality that companies must deal with. Proactively integrating an insurance optimization strategy is crucial to control costs and ensure adequate coverage. By working with technical experts, companies can ensure they are prepared to face these challenges while optimizing their insurance contracts.
At Spencer Conseil, we support mid-cap companies and large groups in analyzing their P&C contracts and developing optimization strategies tailored to their specific needs.
Contact us to learn more about our services and how we can help you protect your assets against climate risks.
