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INSURANCE - MORE FREQUENT FLOODS HAVE MADE COMPANIES MORE CAUTIOUS

Interest in flood insurance not yet overflowing

WITH floods, large or small, becoming an annual occurrence in Slovakia, insurance companies are becoming more cautious in assessing the risk of natural disasters hitting some locations.
Floods have hit Slovakia each year over the past 10 years, some serious and some minor. As a result, several insurance companies have started using flood maps, a tool relatively new in Slovakia.

WITH floods, large or small, becoming an annual occurrence in Slovakia, insurance companies are becoming more cautious in assessing the risk of natural disasters hitting some locations.

Floods have hit Slovakia each year over the past 10 years, some serious and some minor. As a result, several insurance companies have started using flood maps, a tool relatively new in Slovakia. A house in a location with high risk of flooding can be denied insurance against this natural disaster.

"Floods are the most frequent type of natural disaster in Slovakia and in neighbouring countries, which cause the most damage and the most extensive damage," said Ivana Čambalíková, spokeswoman for the Česká Poisťovňa-Slovensko insurance company.

Cleaning up damage caused by floods has cost Sk17 billion (€506.7 million) in the last 10 years, according to the Environment Ministry.

"The floods started in 1996. Since that year, floods have come every year, but to a varying extent - sometimes larger, sometimes just local floods," Katarína Hajtášová, director of the integrated management division in the Hydrometeorological Institute in Bratislava, told The Slovak Spectator. "But it has been every single year."

The Morava river basin in western Slovakia was hit the most, then the Bodrog and Hornád river basins in eastern Slovakia, she said. In central Slovakia, the Hron river basin was most affected.

The flood map divides Slovakia into zones by the level of risk of flooding. The zones range from locations with the largest risk to locations with no risk of flooding.

"If a house is damaged by flooding several times a year or several years in a row, it is not a coincidental event any more," said Lucia Muthová, spokeswoman of Allianz-Slovenská Poisťovňa, which is starting to use a flood map. "The building is clearly built in a wrong place unsuitable for building housing."

The ČSOB Poisťovňa insurer will not insure a property against floods if it is located in an area where the floods regularly occur, said Denisa Bačová, product manager for the company's non-life division.

Česká Poisťovňa-Slovensko was the first insurer in Slovakia to use the flood maps, starting last year. It is impossible to insure against floods in locations that are hit by floods more than once every 20 years or more than once in the last 10 years, Čambalíková said.

"Based on the flood map, an insurer can set a certain level of risk for each address in all of Slovakia," she said.

The flood map lets companies set insurance premiums more objectively, she said. It also helps clients decide whether it is worth investing in a property or whether to invest in anti-flood measures. Insurers can recommend prevention measures such as anti-flood dams.

Insurance against damages caused by flooding is offered as part of more comprehensive property insurance packages. Apart from flooding, they include coverage for windstorms, earthquakes, heavy snow, avalanches, landslides and others.

The Uniqa insurer has seen more interest in natural disaster insurance over the last five years. It is linked to the higher frequency of these dangers and people's growing awareness of the need to protect their property against the disasters, the insurer said.

"As a consequence of more frequent natural disasters in Slovakia, more and more people began feeling responsibility for their property," Čambalíková said.

That wasn't just people who personally experienced a natural disaster, but also people who were not directly affected.

However, the growth in the number of property insurance policies has only been mild, she added. The fact that floods never hit all of Slovakia at once, but rather separate locations, could be the reason, Čambalíková said.

The Czech Republic, on the other hand, has had many severe floods that covered almost its entire territory. Česká Poisťovňa-Slovensko has a mother company there, and it recorded much higher interest in property insurance in the Czech Republic than in Slovakia.

Slovakia has not yet had such severe flooding, Muthová agreed, adding that Allianz-Slovenská Poisťovňa has not seen any growth in property insurance.

"Interest in property insurance has been stable for a longer time; it is only increasing mildly," she said. "The interest grows immediately after these events, but later it gets back to a standard level."

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