Portugal’s insurance companies are to adapt premiums according to the degree of flood risk in each of the country’s zones ‘because of climate change’ according to the president of the Portuguese Association of Insurers (APS).
Based on work by boffins at the University of Lisbon, "we will reorganise our models and classify risk in a different way," said Pedro Seixas Vale from the association.
"We will assign to each area of the country risk ratings for flooding and we will set a charge to customers to reflect this,” added Vale.
The whole country has been categorised and a report released "Floods and Risk in Climate Change Scenarios" which was presented today shows that coastal areas, valleys and low-lying areas will soon have their premiums hiked under the mantle of ‘climate change.’
The insurance industry "was feeling that the country is experiencing an increasing number of phenomena that cause high losses, such as natural disasters, so we asked investigators with the latest knowledge in this area to produce the plan, a project that took three years."
" All this has gives us a picture of the risk of floods in Portugal, a study done parish by parish, so it’s very detailed, and gives precise indications for special areas which have the greatest likelihood of serious insurance claims" explained Vale who said weather patterns were changing with average rainfall decreasing but happening over shorter periods, causing flash flooding.
The study will be available online, "especially useful for municipalities, especially in the most dangerous areas so they can take measures" to reduce risk.
The Portuguese Association of Insurers has shelled out €320 million in 8 years for serious incidents due to the weather and clearly has had enough. The new premiums will ensure its members are no longer out of pocket with hikes in rates expected to cover both domestic housing and business premises.
The only surprise is that this system has not been used for years. Whether there will be a reduction in areas of low risk remains to be seen but the answer seems clear, pemiums will rise for many, many more properties will be uninsured and the insurance companies will be able to cherry pick the areas where they want to offer cover, and refuse cover in flood risk areas.
