Following the widespread destruction caused by Storm Nils across southwestern France, Morningstar DBRS has estimated that total insured losses could surpass €3 billion.
In a new report, the firm said that in recent days, Storm Nils has unleashed heavy rainfall, powerful winds, and severe flooding, resulting in at least two fatalities and dozens of injuries.
Saturated soils and overflowing rivers have reportedly intensified the damage, affecting multiple regions.
Citing Cotality Hazard HQ Command Central, Morningstar DBRS noted that preliminary insured losses related to wind damage alone are estimated between €800 million and €1.2 billion.
These figures exclude losses from flooding and other hazards, meaning total insured losses could more than double once damages to vehicles, property, and business operations are fully accounted for.
With this in mind, Morningstar DBRS explained that it is possible that total insured losses could exceed €3 billion.
The firm continued that in France, natural catastrophe losses are covered by the NatCat (Catastrophes Naturelles) insurance system, a nationwide public–private framework that provides automatic catastrophe coverage through all property insurance contracts.
“France’s NatCat insurance scheme is a state‑supported public–private mechanism designed to ensure nationwide protection against natural disasters by embedding mandatory catastrophe coverage into all property insurance contracts. Established in 1982, the system requires insurers to include NatCat coverage by default, financed through a premium surcharge,” Morningstar DBRS said.
According to the firm, this mechanism ensures widespread, affordable protection against events such as floods, droughts, earthquakes, and landslides, while shielding private insurers from the financial burden of large catastrophic events.
As we’ve extensively reported, insured losses from adverse weather events have increased significantly over the past decade, driven by more frequent and severe climate-related episodes.
In response, the French government raised NatCat surcharges effective 1 January 2025, property policies from 12% to 20% and motor insurance from 6% to 9%, to reinforce the financial sustainability of the scheme as climate pressures escalate.
Morningstar DBRS concluded, “While this adjustment ultimately increases costs for policyholders, the French NatCat re/insurance scheme remains one of Europe’s most comprehensive natural‑disaster insurance frameworks.
“Its structure underpins the financial stability of the private insurance sector by providing essential loss‑absorption capacity and shielding insurers from the financial impact of large‑scale catastrophic events.”
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