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Mandatory Flood Insurance Proposition Gains Widespread Approval in Germany
A majority of homeowners and tenants in Germany support the federal government's proposed mandatory insurance against floods and other natural disasters, according to a recent survey by Innofact. The initiative, a key component of the Union and SPD's coalition agreement, aims to address the substantial financial burden caused by natural disasters on federal and state governments.
The survey unveiled that 78% of homeowners and 79% of tenants favor the introduction of compulsory elemental damage insurance. However, opinions diverge on the potential costs, with 15.9% of homeowners expressing they cannot bear further expenses, and another 28.5% expressing reluctance to.
The government's plan is a response to the high costs incurred from flood-related disasters, with aid programs strainingly draining public funds. Approximately half of German residential buildings are currently uninsured against elemental damages, significantly escalating these costs.
Unanswered questions remain, such as whether all homeowners will be mandated to secure such insurance or if the coalition will allow exceptions for the reluctant. The coalition agreement suggests an opt-out solution, a demand from German insurers to ensure that buildings constructed in flood-prone areas will not pose excessive costs for them.
Insurers, while maintaining some reservations, have largely shifted their fundamental resistance to a mandatory insurance, provided that certain conditions are met. Jörg Asmussen, CEO of the German Insurance Association (GDV), remarked, "The federal government's commitment to elemental protection is an important signal. However, insurance protection alone is not enough."
The GDV advocates for a comprehensive concept incorporating stricter urban planning, climate-resilient construction, and a binding construction stop in high-risk areas. In addition, a climate risk assessment for building permits is demanded.
Building in floodplains remains contentious, despite being prohibited in Germany. Loopholes in the Water Management Act permit construction in flood-prone areas, with an estimated 300,000 buildings located in potentially dangerous locations. Both the federal and state governments, however, are hesitant to confront municipalities on this issue.
Key stakeholders, including the German Association of Towns and Municipalities, support a general refrain from new building areas in flood-prone regions and an opt-out solution, leaving the final decision with the insurance policyholder. However, the debate persists on whether only homeowners or also tenants should bear the costs of the compulsory insurance.
While the official implementation of the coalition's plan remains uncertain, the federal ministry of justice is reportedly actively working on its realization. The focus during the current legislative period is likely to shift towards balancing the need for enhanced protection through mandatory insurance with affordability and potential urban planning role in risk mitigation.
- The German Insurance Association (GDV), in support of the mandatory insurance, emphasizes the need for additional measures such as climate-resilient construction, stricter urban planning, and a binding construction stop in high-risk areas.
- To address the issue of existing buildings in flood-prone areas, the coalition agreement suggests an opt-out solution, leaving the decision of securing insurance to homeowners, but questions remain about whether tenants should also bear the costs.
- Environmental science, climate-change, and the impact on the environment are perhaps not at the forefront of discussions, but the adoption of climate-resilient construction and urban planning could contribute significantly to addressing environmental concerns and lessening the effects of climate change in Germany.
