As intense rainstorms become more frequent due to climate change, insurance costs in Sweden may rise. The recent severe weather in Västernorrland highlights the growing risk of natural damage, prompting concerns about future insurance coverage. Expert Staffan Moberg emphasizes the need for municipalities to improve climate adaptation efforts to mitigate these risks.
Rising Insurance Costs Loom as Intense Rainstorms Increase
Rising Insurance Costs Loom as Intense Rainstorms Increase
The frequency of intense rainstorms is expected to rise, potentially leading to higher insurance costs and significant demands on municipalities.
– Many have a long way to go, says Staffan Moberg from Svensk försäkring.
Washed-out roads, entire villages cut off, and paralyzed train traffic have had extensive consequences for both individuals and businesses.
This is the reality following the severe rainstorm in Västernorrland over the weekend.
– This is something we will see much more of in the future. We will experience more large, intense downpours. Both the intensity and frequency will increase with climate change, says Staffan Moberg, a lawyer and climate adaptation expert at the industry organization Svensk försäkring.
Risk of Insurance Denial
If downpours lead to flooding, it can cause extensive natural damage to property. Last year, 20,000 natural disaster-related insurance claims occurred in Sweden, with insurance companies paying out more than 1.2 billion kronor.
However, there is a long-term risk that insurance companies may deny coverage, and insurance premiums may become more expensive.
Staffan Moberg mentioned this risk four years ago, following floods in Gävle.
Now he says:
– Our starting point is that we want to insure. But a problem arises if the same properties are repeatedly affected.
– Currently, it is often different properties that are affected. This means it is still possible to insure, but if the number becomes too large or an entire area is threatened by flooding, insurance companies may find it too costly. Then they might stop insuring for that type of damage.
International Discussion
Staffan Moberg explains that insurance companies reinsure their risks with large international companies. Internationally, there is a discussion about the extent to which natural damage can continue to be insured in certain areas.
– But that discussion has not taken place in Sweden, primarily in the USA, he says.
How likely is it that property insurance will become more expensive in Sweden?
– It will gradually affect premiums more and more. But so far, the costs for natural damage are significantly lower than for fires and water damage inside properties, such as when pipes break. If we can bear those costs, we can likely bear these as well.
The Demand on Municipalities
Staffan Moberg says consumers should turn to their municipalities to check the status of their property. Is it on land at risk of flooding? What does the water and sewage network look like?
And it is important that municipalities take responsibility for climate adaptation, according to the insurance expert.
– They need to focus on analyzing the risks. It has slowly improved, but many municipalities have a long way to go. Especially small municipalities have done nothing. Help is needed from the state and society.
What can happen if municipalities do not conduct these risk analyses?
– There will be more damage, and the municipality's policyholders will face higher insurance costs.