Insurance Firm Pays Record €227m in Disaster Compensation

Insurance Firm Pays Record €227m in Disaster Compensation

The village of Lengau during severe flooding in mid-September. Image: APA

 

The insurance firm Wiener Städtische paid out a record €227 million in natural disaster claims last year, according to CEO Ralph Müller.

Müller said the figure had surpassed even the previous high from 2021, with the main driver being severe storms in September, which accounted for more than half of the total damages.

Since 2010, the company has covered €1.5 billion in disaster-related claims, with the trend accelerating in recent years. “A great deal has been invested in this country, yet damages are still rising disproportionately. This is clearly due to the increasing frequency and intensity of meta-events,” Müller said.

Rise in Claims

The number of claims has also risen sharply. In 2024, Wiener Städtische processed 71,000 cases – up from 48,000 the year before. Müller attributed the increase not only to inflation but also to the growing frequency and severity of extreme weather events.

Over the past decade, the financial burden has more than doubled. Between 2010 and 2019, the insurer paid out an average of €69.5 million per year in disaster claims. Since 2020, that figure has jumped to €155 million annually.

Limited Insurance Cover

Despite rising costs, insurance cover remains limited. Wiener Städtische offers protection of up to €100,000, but this is often insufficient for major disasters. In high-risk flood zones, extending coverage is not an option.

“In these zones, where we must expect a once-in-30-years flood event, it is simply not feasible for the insurance sector as a whole. The costs are too high,” Müller explained.

He called for a joint public-private insurance model, similar to those in Belgium and Switzerland. But he insisted any initiative must come from policymakers. “We are happy to contribute, but this must come from the political sphere.”

Rising Costs for Policyholders

Müller does not believe natural disaster insurance will become unviable but warned that prices will continue to rise. “We just have to be aware that it will become more expensive,” he said.

Annual price increases of 1% to 1.5% are expected, along with regular premium adjustments to avoid underinsurance. So far, customers have accepted these changes without a significant rise in policy cancellations.

Call for Pension Reform

Beyond insurance, Müller also urged action on Austria’s pension system, which he described as unsustainable due to an ageing population and heavy reliance on state benefits.

“By relying solely on the first pillar (state pension) and largely neglecting the second and third pillars (occupational and private pensions), we are failing to attract returns from the global capital market that could help stabilise the system,” he said.

Austria’s total private pension and life insurance funds stand at just €100 billion – low compared to other countries. Müller argued that a stronger private pension system could bring in billions in additional investment.

“To encourage more people to invest in private pensions and make it more attractive, financial incentives are needed,” he said, proposing a cut to insurance tax and an increase in the tax-free allowance for occupational pensions from €300 to €1,200.

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