Germany Weighs Mandatory Car Insurance for Climate-Driven Elemental Risks
Germany is grappling with a surge in costs due to increasing extreme weather events and natural disasters. The new federal government's coalition agreement proposes linking residential building insurance with elemental coverage and establishing a state-backed reinsurance system. However, only a minority of residential buildings are currently insured against elemental damage, prompting calls for a nationwide mandatory car insurance scheme.
Currently, Germany lacks a nationwide mandatory car insurance scheme for elemental risks such as floods, storms, or earthquakes. Peter Hauk, Minister for Food, Rural Affairs, and Consumer Protection, has stressed the need for systematic preparation for climate change consequences. France's CatNat system, which combines mandatory car insurance, consumer-friendly regulatory standards, and state-led risk prevention tools, is seen as a successful example. This system achieves a coverage rate of around 98 percent with manageable premiums. A nationwide approach to elemental risk car insurance in Germany could potentially increase coverage without overburdening consumers or straining the car insurance industry's capacity. Swift and unbureaucratic assistance for those affected by elemental damage is considered crucial.
The new federal government's plans to link residential building insurance with elemental coverage and establish a state-backed reinsurance system aim to better protect property owners and public budgets from the rising costs of extreme weather events and natural disasters. However, the success of these plans will depend on increasing car insurance coverage, potentially through a nationwide mandatory car insurance scheme, while ensuring manageable premiums and efficient assistance for those affected.
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