The widespread flooding, caused by an unusual Vb weather system, has affected thousands of homes, businesses, and public infrastructure, underscoring the growing threat of climate-related disasters for the insurance industry.
The Vb weather system, a well-documented meteorological pattern that funnels cold air from Europe southward, where it picks up warm, moist air from the Mediterranean, led to extended periods of heavy rainfall and significant flooding. While Vienna was largely spared due to flood protection measures, the surrounding regions in Austria, Czechia, and Poland experienced catastrophic damage, with more than 11,500 residential buildings and 6,000 commercial properties impacted in Poland alone.
Flood insurance coverage varies significantly across the region, impacting the insurance industry’s liability. In Austria and Czechia, relatively high flood insurance take-up rates mean a greater share of the economic losses will be insured, although coverage limits may limit payouts in Austria. In contrast, in Poland, flood coverage for residential properties remains low, with most losses being borne by uninsured homeowners.
“This was indeed a unique event, largely due to the exceptional levels of rainfall in certain areas,” Margot Doucet, manager and scientist at Extreme Event Solutions for Verisk, told Insurtech Insights.
“However, the weather system responsible for the intense precipitation—a well-known Vb (“five-b”) pattern—is not uncommon. This system occurs when colder air over Europe pushes low-pressure systems southward toward the Mediterranean.”
Doucet explained: “As the system approaches the continent, it picks up warm, humid air from the Mediterranean, leading to prolonged and intense rainfall as it moves back northward. While the specific precipitation patterns and the rivers and streams affected in this event were unique, Vb weather systems have caused notable flooding in the past. For example, they were responsible for flooding in Germany earlier this year, as well as devastating events in Central Europe in 1997, 2002, and 2013.”
Docuet said that modeling the event posed challenges, with the wide geographic footprint, spanning multiple countries with varying levels of impact, making the process particularly complex and time-consuming. “Accurately capturing the performance of levees and other flood protection measures—whether they failed or held—during the remodeling phase was a critical task. This is always a challenge with flood events, but it becomes even more daunting when covering such a large area.”
She added: “ In this case, it wasn’t just about modeling major rivers; we had to account for the entire network of tributaries, ensuring that every river and stream with a catchment area of at least 10 km² was included in the modeling of this event.”
Verisk’s loss estimates account for physical damage to residential, commercial, and agricultural properties, as well as business interruption claims. However, they do not include uninsured losses, damage to infrastructure, or costs associated with hazardous waste cleanup, which means the total economic impact of the disaster could be far greater.
As extreme weather events become more frequent and severe, insurers are increasingly tasked with adjusting their risk models and strategies. Verisk’s work highlights the complexity of modeling such large-scale disasters, particularly in accounting for regional differences in flood protection and the performance of levees and other infrastructure. This flood event, coupled with previous incidents in Europe, reinforces the need for the insurance industry to adapt to the growing risks posed by climate change.
With losses estimated in the billions, the event serves as a stark reminder of the financial and operational challenges that climate-related disasters pose to insurers and the broader economy.
Source: Verisk
