Mandatory Essential Insurance: A Rational Argument

In the wake of the recent catastrophic flooding, the need for effective risk management in Germany has never been more pressing. According to recent reports, only around 50 percent of residential buildings in the country are insured against weather events. This statistic, coupled with the difficulty in obtaining insurance in high-risk areas, highlights the urgent need for action.

The lack of insurance protection in high-risk areas is a significant concern, as it leaves property owners vulnerable to the devastating effects of natural disasters such as heavy rain, flooding, storms, or snow pressure. Risk-appropriate insurance, however, can provide protection in case of damage and incentivize precautions to minimize climate-related deaths and damages.

The agreement in 2017 among ministers of the states stated that payments to those affected by disasters would only be made in exceptional cases. However, following the current flood disaster, financial aid from the state has been promised. A legal obligation to insure residential buildings against natural hazards could increase resilience and recoverability after a crisis.

The National Academy Leopoldina has identified flooding and drought problems, alongside pandemics, as climate-related natural phenomena for which precautions can be taken. Precautions such as risk-appropriate insurance premiums, which can provide a constant incentive for individual and societal precautions to minimize damage from extreme weather events, are essential.

Interestingly, despite the risks involved, the majority of homeowners are currently not interested in suitable insurance protection. This lack of interest also applies to most political parties in Germany. However, there are no specific political parties identified as having positioned themselves against seeking suitable insurance solutions for weather extremes.

In regions with high weather risk, residential buildings can be insured if sufficient technical precautions are taken. For instance, in Germany, weather-related damages are generally insurable with an elemental damage insurance within a residential building insurance. Even minimal self-retention, which home and apartment owners can bear themselves for frequently occurring small and medium damages, is accepted.

De-urbanizing centuries-old properties is not feasible, and new residential buildings in flood-prone areas with improper building permits also require protection. The latest flood disaster has underscored the need for more legal and technical precautions to better manage weather extremes.

In conclusion, the need for risk-appropriate insurance and precautions in Germany is clear. By increasing insurance coverage, particularly in high-risk areas, and implementing necessary precautions, we can work towards minimizing the impact of climate-related natural disasters and building a more resilient future.