Dutch governments should ask themselves whether it is still possible to build in areas that are at risk of flooding due to climate change. Houses there may soon no longer be insurable, and mortgage lenders will therefore not want to finance them. The Dutch Association of Insurers warned about this on Tuesday with the publication of its second Climate Damage Monitor . The monitor shows that the insured damage due to extreme weather such as downpours and large hailstones amounted to 465 million euros last year, for private individuals and companies together. In the years since 2007, that amount was much lower: an average of 325 million euros. Based on the current models of the meteorological institute KNMI, the insurers expect the damage to increase by another 200 to 300 million euros per year if no action is taken. Climate-proof “This is a call to action,” explains Federation Director Richard Weurding in a video call. “What needs to be done to make the Netherlands more climate-proof? We all have to work together, but the government has to take control. To prevent damage, so prevention. But also to adapt, adaptation. And in the third place: we really have to look at where we can still build in the Netherlands.” Weurding thus points to building plans for, among others, Gouda in the Zuidplaspolder and the Rijnenburg polder near Utrecht. These areas are low, so the risk of flooding is high. The independent engineering firm Deltares recently warned against building in areas that may not remain dry in the future, such as in Zeeland. Weurding wants to prevent insurers from expressing doubts about insurability once construction plans have already been completed or are in an advanced stage. “If you don’t think about it, the long-term consequences are serious.” Public-private New water damage insurance The flood in Limburg two years ago resulted in 210 million euros of insured damage . Much of the damage was not insured. A large part has been paid by the government, through the Disaster Compensation Act. The Dutch Association of Insurers is working on a public-private partnership to cover flood damage through ‘normal’ insurance. According to Weurding, a major advantage of water damage insurance is that you have one counter, where you can go if something happens. “The infrastructure of insurers and loss adjusters can then be called in. Then you are no longer dependent on the question of what the payment percentage will be and how long it will take before the government takes action. We can then further optimize the service.” The Association expects to be able to present the plans to the government around the turn of the year. Can’t you as insurers just say now: buildings in those areas are not insurable? “That is still a bit too early. We would now like to share our knowledge and insight, so that we can make sensible decisions together with the government. But in the end it comes down to the question of whether you can guarantee insurability in the long term. And if all insights, statistics and analytics only get worse, I can’t guarantee that. I don’t know of any insurer that already says: we don’t do that anymore. But I don’t rule out that this will become more difficult in the long run.” Will insurance first become more expensive before a property becomes uninsurable? “Yes. We want to send a signal with this story. Insurance is an international market. Insurers use reinsurers. Those reinsurers are also looking at this. We have already warned a few times, but apparently we have to do it again.” Insurers are also involved in mortgages. Will it be more difficult to get a mortgage in such an area? “That could just happen. Mortgage lenders, such as insurers and banks, ultimately look at the question: is home insurance available for this? If the building is not insured, you as a lender have a very high risk. If something goes wrong, your collateral is gone.” Also read: Insurers and KNMI join forces in the fight against climate damage The Climate Damage Monitor finds that damage peaks are getting higher and higher. Isn’t there a new, higher ‘normal’? “That conclusion seems obvious. The peaks are getting higher, the extreme weather seems to be increasing. The KNMI is conducting a new study, which will recolor the scenarios next year. We know what those scenarios looked like a few years ago – that’s what we’re basing ourselves on now. I am very curious what it will look like next year. I wouldn’t be surprised if their insights are sharpened and things get even worse.” A version of this article also appeared in the newspaper of October 12, 2022