Preliminary estimates from global reinsurance broker Gallagher Re have placed the potential public and private insured losses from October’s Spanish floods between €1.5 billion and €2.5 billion ($1.6 billion and $2.7 billion).
It’s important to note that this estimate is preliminary and is subject to change.
For those in need of a recap, incessant rainfall and severe weather resulted in catastrophic and life-threatening flooding and flash-flooding along with notable material damage across eastern and southern Spain between October 28-30, particularly in localities of the Valencia Province.
Preliminary reports have indicated that at least 217 people were killed, of which 214 were from the Valencia Province.
Gallagher Re noted that this has marked the deadliest floods for the country in decades (since 1973).
“The floods generated significant material damage with impacts to residential and commercial properties, vehicles, and agribusiness operations. At least 190 instances of damages due to severe weather and heavy rain were reported in Spain via the European Severe Weather Database (ESWD). Regional rivers, including the Júcar, Magro, and Turia burst their banks, and likewise multiple reservoirs exceeded capacity,” the firm explained.
Adding: “The State Meteorological Agency (AEMET) issued the highest level, red rainfall warnings for multiple regions including Valencia and Malaga as the event progressed.”
Gallagher Re explained that most of the property and agriculture damage will be covered by the Spanish Consorcio de
Compensacion de Seguros (CCS) and Agroseguro.
“The CCS has already released a statement confirming that they will indemnify insured damages resulting from the extreme floods Valencia, Albacete, Cuenca and East Andalucia. The CCS will directly manage and pay claims to residential, commercial, industrial property, infrastructures and motor, including business interruption losses,” the firm said.
Looking at the impact that the flooding could have on the reinsurance market, Gallagher Re stated that reinsurers are anticipated to be impacted by local CAT XL and pro-rata programmes.
Additionally, the local CAT XL local Spanish market retention level is estimated to be around €15 million to €20 million ($16 million to $22 million). A preliminary reinsurance market loss between €15 million and €50 million ($16 million to $54 million) could be estimated, although being an initial indicative view this may be subject to change.
From what Reinsurance News understands, the catastrophic flooding was the result of a cut off low pressure system which slowly traversed from northern Africa toward southern Spain between October 28-30.
In fact, this type of cut-off low pressure systems is locally known as a DANA (Depresión Aislada en Niveles Altos).
“A DANA is a low which becomes cut-off from the main upper-level steering flow. They are most prevalent across the Mediterranean region in the late-summer and autumn months. Given this lack of steering, they subsequently meander over similar regions for several days, often bringing renewed rounds of impactful rain and severe weather,” Gallagher Re added.
The reinsurance broker compared the event towards both the La Riada 1957 and the Pantanada de Tous 1982 events, and also highlighted the historic Great Flood of Valencia (Gran Riada de Valencia) in October 1957, which resulted in the deaths of more than 80 people and generated economic losses which reached into the billions USD (in today’s dollars).
In related news, Morningstar DBRS anticipates insured losses from this event to exceed €1 billion, considering the extensive damage to people, properties, vehicles, businesses, and the agriculture sector.
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