The heavy rainfall of July 2021 also affected the Netherlands, primarily in the provinces of Limburg and Noord-Brabant. Apart from local precipitation, the Netherlands were also severely impacted by the heavy rainfall in Belgium, Luxembourg and Germany, which flowed downstream through rivers to the Netherlands.
The rivers Geul and Gulp flooded, leading to damages in the counties of Heerlen, Kerkrade, Landgraaf, Gulpen, Meersen and Valkenburg.
Valkenburg became the epicentre of the floods and the city centre flooded on 14 and 15 July. The Maas (Meuse) River’s water level reached a record high but did not flood due to active water management. If the Maas River had flooded, damages would have increased exponentially.1
No fatalities were reported in the Netherlands. While the country experienced extreme rainfall, its towns were not entirely submerged and not a single person died.
Initially, total material damage in the Netherlands attributed to the floods was estimated between EUR 350 million and EUR 600 million. Since then, estimates up to EUR 1.8 billion have been published.2
Impact on insurers
Despite delays created by complex water damages, scarce building resources and the COVID-19 pandemic, insurers fully settled about 80% of private claims and about 60% of business claims related to the Limburg floods by December 2021:
- In total, insurers received approximately 25,000 claims from Limburg and Brabrant, with an estimated total insured damage of EUR 160 million to EUR 250 million.
- Claims filed for damages to personal homes and cars accounted for the vast majority of total claims, and the rest were business-related claims.3
- Additionally, citizens, companies, associations or foundations with claims that exceeded policy limits or were excluded from coverage could file with the government under the Reimbursement for Damages Due to Disasters Act.4
Although private insurance does not by default fully cover flood losses, many Dutch insurers tried to generously settle claims. To expedite the process, insurers sent teams of claims handlers to the towns that were severely impacted. These experts helped their policyholders avoid additional losses, answered questions and assessed monetary damages.
In the Netherlands, larger companies are typically insured via "beurs" (broker) policies, where risk is borne by multiple insurers. Under these contracts, policy conditions are more strictly enforced by the leading insurer. In 2021, some beurs clients were surprised to learn that their policies did not cover floods. Government officials and the media publicly complained about this lack of transparency, and some insurers responded by paying 2021 flood claims.
The July 2021 floods caused broader discussion among insurers and between insurers and citizens regarding what can and should be covered going forward. Previously only one insurer offered insurance against flooding of “secondary weirs.” After the 2021 floods, this coverage was added to standard fire insurance by two other large insurers. Breaches of primary weirs and dikes are currently not insured, and in general are considered uninsurable due to the Netherlands location next to the sea with several large rivers and densely populated areas at or below sea level.
To raise awareness, the Netherlands Authority for the Financial Markets (AFM) published a report in October 2021 explaining the increased risk of flood damage and other extreme-weather risks to:
- Warn consumers that these risks are not always (fully) covered by insurance
- Encourage insurers to be more transparent in their communications about policy conditions
- Petition the government to work with insurers to actively search for solutions to insure climate-related damage risks5
Outlook for the future
The likelihood and scale of future extreme weather events in the Netherlands depends largely on water management. The use of water locks can drastically mitigate the impact of rising water levels. Dikes must be properly maintained to prevent floods following breaches.
Without additional measures, floods will likely increase due to rising sea levels and extreme rain events. The economic costs of floods will also increase because residences are being built in areas that are below sea level due to the housing shortage in the Netherlands. For example, a new community of 8,000 homes is planned for the polder area between Gouda and Rotterdam, even though the houses will be built six metres below sea level.
To help local and regional governments get started with climate stress tests, the Ministry of Infrastructure and Water Management sponsors a digital Climate Impact Atlas. This website shows the effects of climate change throughout the Netherlands in current and future scenarios, including floods, drought and heat.
For questions or more information on country-specific climate change and risk management, contact the author listed here or your usual Milliman consultant.
1 Wikipedia. Floods in Europe in July 2021 – Netherlands.. Retrieved 11 March 2022 from https://nl.wikipedia.org/wiki/Overstromingen_in_Europa_in_juli_2021 - Nederland.
2 EMW. “Hoogwater 2021 Feiten en Duiding.” Retrieved 21 November 2021 from https://www.tweedekamer.nl/downloads/document?id=096991fc-8f54-41e4-8bba-6e94aed53293&title=Samenvatting%20ENW-rapport%20%27Hoogwater%202021.%20Feiten%20en%20Duiding%27%20d.d.%2020%20september%202021.pdf.
3 Dutch Association of Insurers. Flood Limburg. Retrieved 11 March 2022 from https://www.verzekeraars.nl/verzekeringsthemas/nieuwe-risicos/duurzaamheidklimaat/klimaat/watersnood-limburg.
4 Business.gov.nl. Reimbursement for damages due to disasters. Retrieved 11 March 2022 from https://business.gov.nl/subsidy/reimbursement-damages-disasters/.
5 AFM (28 October 2021). Damage caused by climate change increasingly uninsurable. Retrieved 11 March 2022 from https://www.afm.nl/nl-nl/nieuws/2021/oktober/schade-klimaatverandering-vaker-onverzekerbaar.