The German Insurance Association (GDV) has unveiled a framework to ensure protection against natural disasters remains widely available, affordable and sustainable in the long term, centered on a new reinsurance vehicle called Elementar Re.
GDV said that through the Elementar Re model, insurance companies are making “concrete proposals” on how to build Germany’s national protection system.
Elementar Re reportedly relies on two private safeguards in the event of a claim, including its own reinsurance and a reserve fund it builds over time.
The national stop-loss mechanism would only be activated in extreme events when private reserves are almost exhausted. The state therefore acts as a backstop, rather than a primary insurer, to provide a targeted safety net for catastrophes exceeding €30 billion, in line with the Alliance’s market supplementary reinsurance approach.
The model is designed to operate within a broader natural disaster framework, in which coverage becomes default coverage for new policies and a one-time switch for existing policies, both with the option of opting out or waiving state aid.
GDV said its effectiveness will depend on strong preventive measures, mandatory risk assessments, binding building rules in hazardous areas and full transparency on local risks, ensuring sustainable insurance, early risk management and effective limitation of potential damage.
Jörg Asmussen, CEO of GDV, said: “Climate-related losses have increased fivefold in Germany since 1980. Our goal is to create a guarantee system that is permanently effective: fair for homeowners, stable for the market and sustainable for the public sector. With Elementar Re, we are introducing a key building block for this system.
“But it is also clear: insurance alone is not enough. Without ongoing prevention, risks will continue to rise – threatening the entire system.”
According to GDV, more than 400,000 residential buildings in Germany are located in areas where risk-based premiums are difficult to afford.
“Elementar Re brings these high-risk buildings together to provide continued coverage even in challenging risk situations,” the association explained.
GDV added, “Major insurance companies can transfer policies on these homes to Elementar Re. Premiums will be capped at a maximum level and adjusted according to the size of the building. The difference can be made up through small, widely distributed adjustments.”
Anja Käfer-Rohrbach, deputy CEO of GDV, said: “With Elementar Re we can insure even the most vulnerable homes affordably – without distorting the market in the case of solidarity financing.”
