According to Swedish ICMIF member Folksam, Storm Hans is just one in a long line of events that have caused climate-related damage. Damage that occurs more and more often in Sweden, for example in hurricane Gudrun in 2005, the floods in Malmö in 2014, Storm Alfrida in 2019 and the floods in Gävle in 2021. In 30 years, Folksam says the damage costs linked to floods and storms have more than doubled for its home insurance. The risk of suffering climate-related damage is twice as great today compared to 30 years ago.
During Storm Hans, Folksam received claims from over 1500 customers and the current estimated damage cost is SEK 150–200 million (USD 13.6-18.2 million). The most common damage is when water has entered homes, especially villas, during heavy rain. Stormwater systems have not been able to cope with the persistent rain, creating so-called back pressure damage – where water simply escapes from the floor drains into homes. The damage experienced shows the risks of high flows in water and sewerage systems in combination with torrential rain. The largest number of injuries have been reported from Örebro County, Gävleborg County and Skåne County.
“Climate and societal changes increase the need for the state and municipalities to make investments, including in infrastructure. Long-term capital from pension and insurance companies can play a crucial role and help finance this. At the same time, this helps to reduce the risk of damage,” says Ylva Wessén, President and CEO of the Folksam Group and Vice Chair of the ICMIF Board of Directors.
During 2021, the Swedish insurance industry dealt with a total of over 15,000 climate-related flood damages. This is five times more than what is handled in a normal year (about 3,000). The flood in Gävle is one of the most expensive for the industry ever. According to the Swedish Insurance Association, insurance companies had to pay out almost SEK 1.9 billion to affected households in Gävle.
Pension capital can make a difference
In 2019, the Folksam Group invested SEK 2.5 billion to build ten kilometres of new protective walls that will protect the city of Kristianstad from flooding. Kristianstad is Sweden’s lowest city and relies on protective walls to stop the water from flooding the city. The protective walls will be able to withstand a water level of up to 3.7 meters above normal and are expected to be completed in 2025.
“This type of investment is good for our customers, for the municipality and for us as an insurance company. We would like to see more municipalities around Sweden use pension money as part of the work to prevent and reduce the negative effects of climate-related damage,” concluded Ylva Wessén.
Recent climate-related storms with Folksam’s claims costs in real value:
2021: Flood Gävle – 3,100 claims – SEK 650 million
2021: Flood Enskede – 1,300 claims – SEK 190 million
2019: Storm Alfrida – 3,000 claims – SEK 82 million
2014: Flood Malmö – 6,000 claims – SEK 243 million
2005: Storm Gudrun – 25,000 damages – SEK 375 million
