Natural hazard insurance in Germany and Austria

Five years after the Ahr valley flood, Germany’s insurers were still paying for it. In July 2026 the German Insurance Association (GDV) put the settled total at about €8.75bn, and warned against what it called a deceptive sense of security. On the public side, a dpa report the same day found that only €6.2bn, about a fifth, of the federal reconstruction fund of up to €30bn had been drawn by 30 June 2026. The two numbers describe the two halves of the German model: a private market that pays the insured, and a state that pays, slowly, for almost everything else.

Austria has gone further down the second route. Its main instrument is not insurance at all but a tax-funded disaster fund, and only about 5% of the values of households and businesses there are insured against flood, according to the Austrian Court of Audit.

Germany: a voluntary extension

German building insurance comes in layers. A standard residential building policy already includes storm and hail. Damage from heavy rain, river flooding and backwater is covered only if the owner adds the Elementarschaden extension. There is no special statute behind it; it is an ordinary contract under insurance law, priced by each insurer according to risk.

Take-up has grown steadily. The GDV reported in October 2025 that 57% of residential buildings, about 10.2 million, had elemental cover in 2024, up from 41% in 2017. In its September 2026 article on the government’s plans, the GDV gave the figure as 59%.

The regional picture is uneven:

• Baden-Württemberg: 94%. The state had a compulsory public monopoly for building insurance, including natural hazards, until 1993, and most owners kept the cover afterwards.
• North Rhine-Westphalia: from 47% in 2020 to 65% at the end of 2025, according to the GDV’s July 2026 release.
• Rhineland-Palatinate, the state of the Ahr valley: from 37% to 59% over the same period.

Take-up has risen fastest in the two states hit hardest in July 2021, a pattern familiar from other countries: people buy flood cover after they have seen a flood.

Germany’s losses

The July 2021 floods dominate every German statistic. Munich Re put the overall loss across Europe at €46bn, of which €11bn was insured; for Germany alone the figures were €33bn and €8.2bn. The GDV counted 206,000 insured claims worth €8.75bn and reported that about €7.5bn had been paid by July 2024. The Ahr valley 2021 case study follows how the rest of the damage was paid.

More ordinary years are smaller but steady. For 2025 the GDV reported about €1.4bn of natural hazard losses on property, of which about €400m was elemental damage, with an average elemental claim of €4,700.

Who pays when the insurance does not

After July 2021 the federal government set up the special fund Aufbauhilfe 2021, with up to €30bn for reconstruction. The Bundestag passed it on 7 September 2021, and the Länder agreed to repay half of its cost by ceding shares of VAT revenue until 2050. By 30 June 2026, according to dpa, €6.2bn had been drawn: €5.2bn by the Länder (€2.6bn in North Rhine-Westphalia and €2.5bn in Rhineland-Palatinate) and about €1bn for federal infrastructure.

Aid on this scale is the reason the German debate exists. A household that did not buy elemental cover, and then received state help after the flood, has every reason to ask why it should pay a premium next time. Critics of ad-hoc aid argue that it weakens the incentive to insure, and the debate since 2021 has been about how to break that cycle without forcing anyone into a contract they cannot afford.

The German reform debate, step by step

• 15 June 2023. The Chancellor and the premiers of the Länder set up a joint working group on elemental risks, including compulsory insurance.
• 21 February 2025. The working group’s report, published by the Federal Ministry of Justice, shows the federal government and the Länder divided. The federal ministries doubt that a true mandate would be constitutional, and the Federation is unwilling to fund a state stop-loss.
• 9 April 2025. The coalition agreement between CDU/CSU and SPD says new building policies should be sold only with elemental cover, existing policies extended at a cut-off date, and an opt-out and state reinsurance examined, as summarised by the broker BLD in April 2026.
• December 2025. The GDV proposes “Elementar Re”: cover by default with an opt-out, where opting out means giving up any claim to state aid, a levy on all building policies, and a state stop-loss only above €30bn, as reported by Artemis.
• 26 March 2026. Die Linke tables a Bundestag motion (Drucksache 21/5030) asking the government to bring forward a bill for affordable compulsory cover.
• 28 September 2026. Justice Minister Hubig says the framework paper is complete and in inter-ministerial coordination. New building policies must include elemental cover, existing customers will be offered an upgrade, and there will be no motor-style compulsion but a differentiated opt-out. A draft bill is expected in the first quarter of 2027, according to the GDV.

The opt-out model is a compromise between two positions that could not be reconciled. It keeps the contract voluntary, which answers the constitutional doubts in the working group’s report, and it changes the default, which is what behavioural evidence from Baden-Württemberg suggests matters most.

Germany’s unresolved problems

The unprotected minority. The GDV’s own headline figure is that 41% of residential buildings are still without elemental cover.

Affordability. Artemis, reporting the GDV’s proposal, cited more than 400,000 residential buildings that face prohibitively expensive risk-based premiums. An opt-out model does not by itself make those premiums affordable; the Elementar Re idea of a levy and a state stop-loss was meant to address that, and whether the government framework will do the same should become clear in the draft bill.

Legal doubts. The working group report records constitutional and EU-law concerns about a real mandate.

The aid habit. As long as large floods are followed by large public funds, the incentive to insure stays weak.

EIOPA’s 2025 dashboard captures the result. Germany scores 8 out of 20 on its protection gap measure, with a current flood score of 2.5, in the band EIOPA says should be monitored, and only 26% of Germany’s historical flood losses were insured. The protection gap page puts those figures in the European context.

Austria: the Katastrophenfonds

Austria’s answer to natural disasters is a fund, not a policy. The Katastrophenfonds was first set up as a permanent fund in 1966, after the floods of 1965 and 1966, according to the Federal Ministry of Finance’s history of the fund; its current legal basis is the Katastrophenfondsgesetz 1996. It is financed by a share of income tax, including wage tax and capital gains tax, and of corporate tax, with the costs borne by the Federation.

The fund does more than compensate households. Its 2025 spending, as published by the Ministry of Finance, shows where the money goes:

Prevention is the largest single item, and support for agricultural insurance premiums is almost as large as compensation for private households. Total disbursements in 2023 were €440.97m, according to the Court of Audit.

How Austrian disaster aid reaches a household

A flooded household does not claim from the fund. It applies to its municipality. The federal state (Land) decides how much aid to pay and at what rate, and the Federation then refunds 60% of the state’s payment from the Katastrophenfonds. Aid is discretionary: there is no legal claim to it.

The Court of Audit’s report of 10 October 2025 shows what discretion means in practice. Between 2015 and 2023, aid covered on average 31% of private damage in Carinthia and 63% in Tyrol. Applied to a hypothetical €100,000 of flood damage to a house, those averages would mean about €31,000 in Carinthia and about €63,000 in Tyrol, for the same loss, depending only on which side of a state border the house stands.

Austria’s September 2024 floods

The floods of September 2024, part of the Central European disaster that followed Storm Boris, were Austria’s most expensive for insurers. The Austrian insurance association VVO estimated insured losses at €600–700m on 20 September 2024, which it described as a record. Two days earlier, on 18 September, the government had announced in parliament that the Katastrophenfonds would be raised to €1bn, together with a €1bn flood protection package.

That sequence, a disaster followed by an emergency top-up of a public fund, is exactly what the Court of Audit later questioned.

Austria’s reform debate

The Court of Audit’s October 2025 report recommends an insurance model, or compulsory insurance, for extreme weather damage, citing France and Switzerland as examples. It also recommends stricter building bans in red hazard zones.

The insurers have their own proposal. The VVO argues that natural catastrophe cover should be coupled to fire insurance, along the lines of what it calls the Belgian model, and that only such coupling would allow full-value cover at socially acceptable premiums.

Neither proposal has become law. As of 1 October 2026 no reform had been adopted and no draft law published, according to risControl, which described the debate in September 2026 as a choice between lived solidarity and a false incentive.

EIOPA scores Austria at 8 out of 20, the same as Germany, with a current flood score of 2.5. Only 15% of Austria’s historical flood losses in EIOPA’s dataset were insured, the lowest share among the five scheme countries that the dataset covers (it excludes the UK and Switzerland).

The two countries side by side

For the systems both countries are measuring themselves against, see the CatNat page on France and the Switzerland page. The comparison of European schemes sets all six side by side, and the schemes overview explains the four models.

Germany’s opt-out plan and Austria’s stalled reform start from different places, but they share one question that neither has answered: what happens to the household that opts out, or never insured, when the next flood arrives and the cameras are there. The GDV’s Elementar Re proposal had an answer, no state aid. Whether the government framework of September 2026 shares it will only be clear from the draft bill.