Moody’s RMS Event Response Estimates Insured Losses From the Central Europe Floods Will Likely Range Between €2.5 to €3.5 billion (US$2.8 to US$3.9 billion)

NEWARK, CA – October 1, 2024 – Moody’s RMS Event Response estimates that insured losses from the flooding in central Europe between Wednesday, September 11, and Thursday, September 19 will likely fall within the range of €2.5 billion to €3.5 billion (US$2.8 to US$3.9 billion).

This loss estimate includes the most affected areas in the Czech Republic, Austria, Poland, Slovakia, Hungary, Germany, and Italy. Moody’s RMS Event Response estimates the majority of loss to be driven by the Czech Republic, Austria, and Poland.

The widespread flooding was triggered by heavy and persistent rainfall that fell between September 11-19, 2024, across a wide area of central and eastern Europe that stretched as far as Romania. During this period, rainfall totals in the most affected areas of Lower Austria and the Western Carpathians exceeded over 400 millimeters (15.7 inches) in places.

The rainfall has been associated with a slow-moving area of low pressure over central Europe that brought warm, moist air masses from the Mediterranean and the Black Sea across to central Europe.

When meeting cold polar air on its way south, this moisture precipitated, amplified by a forced uplift over the Sudetes (Czech Republic, Poland, and Germany), Carpathian (predominantly Slovakia and Romania), and Alpine mountain ranges.

Low-pressure systems with trajectories from the Mediterranean across central Europe are also known as Van Bebber Vb-type cyclones and have been responsible for some of the most severe central and eastern Europe flood events, such as in 1997, 2002, 2013, and most recently in May/June this year.

These 2024 European flood events, notably in May/June and now September, again highlight how important from a flood modeling perspective it is for the insurance industry to realistically capture key elements such as antecedent conditions, Vb-type events, cross-country correlations, flood defenses, and combined fluvial and pluvial flooding.

This loss estimate is based on an analysis of the flooding using Moody’s RMS™ Europe Inland Flood HD Models reflecting insured property damage, spoiled contents, and business interruption across residential, commercial, industrial, and agricultural property, and automobile lines.

It also considers sources of post-event loss amplification (PLA), recent inflationary trends, exposure growth, and increases in insurance take-up. The estimate does not include insured losses to non-modeled exposures such as transport and utility infrastructure lines of business, or crops.  

Steffi Uhlemann-Elmer, Director, Model Product Management, Moody’s, commented: “This September’s flooding has been a reminder of the long history of severe and widespread summer flooding that can affect many countries simultaneously over central and eastern Europe.

This event was unique in several ways. Firstly, the low-pressure system named ‘Storm Boris’ was long-lived and brought heavy rainfall and flash flooding to a large area from eastern Romania to northern Italy. After its destructive rainfall over Austria, the Czech Republic, and Poland, Boris was continuously supplied by moist air masses, and took a westward track, bringing extreme rainfall to Italy’s Emilia Romagna region. In recent history, only the August 2002 flood event has impacted a wider area.

Secondly, the weather pattern and associated severe rainfall and flooding were forecast over a week in advance. Warning chains and catastrophe response plans to coordinate efforts across states, regions, and communities had been activated, and preventive measures such as the release of water from reservoirs before the event had been taken.

Thirdly, investments in flood defenses have paid off. Given the long history of flood events across the region, substantial investments were made over time to replace and redesign existing defenses, and to add new risk mitigation structures such as dams, dykes, and flood retention areas.

These measures made a substantial difference in the loss outcome for this event compared in particular to the 1997 and 2002 events. Most notably, the event did not lead to serious inundation of build-up areas along the major Rivers’ Elbe, Danube, and Oder, as the flood wave that accumulated from the mountainous regions was either capped through retention or safely propagated through cities with heightened flood defenses.

Yet, communities and states are facing a large bill to repair or rebuild infrastructure and bail out uninsured households. Although flood insurance penetration has generally increased over the last two decades, take-up of home insurance that includes flood coverage is still very low in regions such as Italy, Poland, and others, or where coverage is limited such as Austria.

Most of the overall estimated insured losses will be retained by insurers, but some reinsurance recovery is to be expected. Overall, 2024 marks another costly year with several flood events on the balance sheet of insurers. Proactively managing severe weather risk and understanding correlation not only across countries but also across perils becomes ever more important.”

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The technology and data used in providing this information are based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. 

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