€350 Million Worth of Hail Damage Hits Germany - A Breakdown of the Highest Claims in 20 Years
Historic 20-year storm damage recorded by insurance companies
Want the gist without all the details? Here's the lowdown: Hail caused an unprecedented €350 million in damages last year, according to the German Insurance Association (GDV). That's the highest total since at least two decades ago, with around 220,000 claims and an average of one lightning strike claim every 2.5 minutes. Let's delve deeper into the reasons for this hailstorm (pun intended) of claims.
Insurers paid out around €300 million for over 220,000 lightning and electrical surge claims in 2023. This sharp spike in costs reminds us of the €300 million mark back in 2002 and 2003. The average claim amount seems to be on a constant climb, amounting to a whopping €1,600 per claim in 2024 – that's about a €200 increase from the previous year. Jörg Asmussen, the GDV CEO, had this to say, "This is primarily due to the enhanced technical sophistication and higher cost involved with repairs."
The number of ground strikes wasn't too far off between 2023 (195,000) and 2024 (210,000). Two-thirds of all recorded lightning strikes were "sheet lightning," which forms inside the clouds. June 2024 witnessed the most lightning strikes, with approximately 62,000 registered. Thunderstorms, mainly a summer phenomenon due to elevated humidity and heat, pave the way for the formation of these cumbersome clouds.
Think that's all there is to it? Not so fast! Several factors are driving up these sky-high claim costs.
- Climate Change Impact: Scientific evidence suggests that climate change exacerbates hail and thunderstorms, leading to more frequent property damage and insurance claims. Certain regions in Germany are particularly vulnerable to these extreme events, dramatically amplifying the local impact and subsequent claims intensity.
- Higher Construction, Repair, and Replacement Costs: The cost of materials and labor for repairs has soared rapidly in recent years, boosting the average claim payout. Modern buildings often incorporate advanced systems and materials, which can be costly to repair or replace compared to traditional ones.
- Growing Asset Values and Exposure: As property values escalate and urban areas become increasingly populated, the potential costs per event also rise significantly. More people and businesses in urban areas mean greater exposure to weather-related hazards.
- Insurance Industry and Consumer Behavior: Greater insurance coverage, enabled by growing awareness of weather risks and insurance availability, leads to higher claim frequency.
- Building Vulnerability: Modern building techniques and materials don't always cater to weather resilience, leaving new constructions potentially vulnerable to hail and lightning damage.
- Improved Data and Reporting: Better tracking and reporting of weather events and claims enhance the perceived and actual rise in costs.
| Factor | Description ||------------------------------|---------------------------|| Climate Change Impact | Increased frequency and severity of hail and thunderstorms || Construction and Repair Costs | Higher material, labor, and advanced technology costs || Asset Values and Exposure | Rising property values and urban asset concentration|| Insurance Penetration | More comprehensive and widely used insurance coverage || Building Vulnerability | Inadequate resistance to extreme weather conditions || Improved Data/Risk Awareness | Enhanced tracking, reporting, and awareness of weather risks |
Sources:- ntv.de- AFP
The community policy might need to be revised to account for increased insurance claims due to hail and thunderstorms, which scientific evidence suggests are becoming more frequent and severe due to climate change. This trend could be particularly noticeable in certain regions of Germany that are vulnerable to extreme weather events.
Environmental-science and finance intersect as rising construction, repair, and replacement costs contribute to an escalation in average claim payouts. This increase can be attributed to several factors, including higher material, labor, and advanced technology costs, as well as the growing asset values and exposure in urban areas.
