Wiener Städtische Records New High in Natural Disaster Damages

"This even surpasses the previous record year 2021 in terms of disaster damage," said the CEO of Wiener Städtische, Ralph Müller, in an interview with APA. The main reason for the increased natural disaster damage was the severe storms in September, which caused more than half of the damage last year. Since 2010, Wiener Städtische has paid 1.5 billion euros in natural disaster damages.

Wiener Städtische: Major Storms are Becoming More Frequent and Intense

Not only the amount of damage, but also the number of damage cases significantly increased last year. The insurer recorded 71,000 cases in 2024, compared to 48,000 cases the year before. This also shows that the increase in damage is not only due to inflation, but that storms are actually becoming more frequent and leaving more and more intense damage - despite massive investments in flood protection. "A lot has been invested here and yet the damages are rising disproportionately. This is clearly due to the frequency and strength of meta-events," said Müller. New damage patterns also play a role. For example, during the storms in September, there were many more basement damages due to a risen groundwater level than was previously common.

The long-term development of damages also illustrates the trend. Since 2010, Wiener Städtische has recorded a total of 1.5 billion euros in damages from natural disasters, around 770 million euros and thus half have occurred since 2020. On average, the damages in the years 2020 to 2024 were around 155 million euros annually. In the decade before, from 2010 to 2019, the annual damages averaged only 69.5 million euros, as calculated by the insurer.

Changes Needed for More Comprehensive Insurance Coverage Against Natural Disasters

The increasing number of insured could also play a role in the rising damages, although the insurance density had already been very high before, according to Müller. However, usually only a small part of the damages is insured, especially in the case of major events like the storm "Anett" in September. The insurance coverage at Wiener Städtische can be extended up to 100,000 euros, but this is often not enough for large damages. In addition, it is not possible to extend the insurance coverage in extreme flood zones. "In these zones, where we have to expect a 30-year flood, this is not reasonable for the entire insurance community from an insurance technical point of view. The costs are too high," said Müller.

A higher level of protection than the 100,000 Euros is also not feasible due to the costs for reinsurers and the general conditions. For a more comprehensive insurance coverage against natural disasters, as it exists in other countries like Belgium and Switzerland, a "legal joint model with the public hand" would be needed, according to the Director General. However, the initiative for this must come from politics. "We are happy to cooperate, but it must come from politics," says Müller. However, he does not explicitly push for a more comprehensive elemental insurance.

Müller is not worried about a general uninsurability of natural disasters. There are sufficient reinsurance capacities on the market to continue to offer comprehensive insurance coverage. "You just have to know, it will get more expensive." One should expect a price increase of about one to one and a half percent per year. Annual premium adjustments are also necessary to avoid underinsurance. The customers would also understand this, the Wiener Städtische does not have problems with cancellation rates.

Wiener Städtische: Director General Calls for Political Action on Private Pension Provision

Political action is also needed on the issue of pension provision - also with regard to the budget gap that needs to be closed. The current pension system suffers mainly from the ageing society and the strong focus on state provision, which is very expensive. "By relying solely on the first pillar (state pension, note) and largely foregoing the second and third pillar (company and private provision, note), we simply cannot bring returns from the global capital market to Austria that would stabilise the system," says the Wiener Städtische boss. Strengthening the second and third pillar must be "urgently initiated" - also because a changeover is a very long-term undertaking. "Every year we start later is of course a lost year," says Müller.

In Austria, the total private life insurance and pension funds have a coverage capital of only around 100 billion Euros. This is - even compared to other countries - very little. If there was more volume here, several billion Euros in value creation could be transferred from the global financial markets to Austria each year. "This is simply not happening at the moment. The money is missing at the end of the whole economy," says Müller. The political attitude still partly prevalent in Austria that everything apart from the state pension is dangerous speculation on the capital market is not verifiable in the long term view of the market and is probably due to a lack of financial knowledge or programmatic reasons. To motivate more people to provide for their own retirement and to make this more attractive, financial relief would be particularly useful. He suggests halving the insurance tax and indexing the allowance for company provision from currently 300 Euros to 1,200 Euros.

Müller is satisfied with the past fiscal year. "We have had a very healthy, nice growth in the Städtische." The growth has been across all departments. Growth has also been achieved in the life sector - mainly due to new contracts, says the company boss. Müller did not want to give exact figures before the announcement of the results by the parent company Vienna Insurance Group (VIG).

(APA/Red)

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