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Flooding in Poland and the Czech Republic

  • One third of the Czech Republic under water;

  • Heavy losses for domestic insurers and international reinsurers;

Hannover, July 17, 1997:

The extreme flooding in parts of Poland and the Czech Republic has resulted in severe damage. In Moravia and northern Bohemia the damage to the local economy has so far run into billions of crowns. According to the latest reports from the Czech Republic, the death-toll stands at 23 with dozens more people reported missing. One third of the country is under water and some 150,000 hectares of agricultural land have been devastated. The floods have also effected VW subsidiary Skoda. Production of the ''Felicia'' car was halted for three days, as most of Skoda's suppliers are based in the disaster area in Moravia.

The full extent of the insured losses has yet to be determined, particularly because some home-owners are still unable to return to their properties. The Czech government has set up an CZK 8 billion fund to deal with the cost of repairing damage to the country's transport network. Czech Prime Minister Vaclav Klaus stated that a rise in taxes will be also necessary to meet the full repair costs.

In Poland and the Czech Republic it is possible to purchase insurance cover against flood, i.e. although flood damage is not generally included in buildings and contents policies, it can be included by endorsement. The expected gross loss under our treaties with Czech companies is calculated as a double-digit million deutsche mark (DEM) sum, however this will be reduced to single-digit million DEM net, after own reinsurance. In Poland, we estimate gross claims in the region of DM 5 m.