Is it Time to Consider Weather Insurance?
At the beginning of July this year, severe and intense weather-related disasters affected a large part of Serbia. The Republic Hydrometeorological Service issued a warning for thunderstorms with heavy downpours, stormy winds, and hail. The central, eastern, and southern parts of the country were the hardest hit. In a short period, more than 60 millimeters of rain fell, which is the average for an entire month. The storm paralyzed operations in certain parts of the country on that day and caused significant material damage to buildings, vehicles, and businesses. The damages are still being assessed, and once the situation has stabilized, the question arises: who is entitled to compensation in such cases?
How to Insure Yourself
Will the state, city, or municipality be "responsible" for repairing the damage to cars destroyed by falling trees or buildings damaged by floods? Or do the affected individuals have to rely on the preventive measures they have taken themselves?
The Value of Alternatives
As always, after these disasters it is clear that insurance is a crucial tool for risk management. There is an increasing emphasis on risks associated with climatic conditions, and insurance policies that cover damages caused by natural disasters are becoming increasingly important, not only for property insurance but also for maintaining economic stability. In the case of the July storms, whether it concerns life, property, or agriculture, only those who have contracted insurance policies that protect against the consequences of weather-related disasters will have the right to compensation.
Property and Comprehensive Insurance
Although essential for vehicle owners in Serbia, particularly during weather conditions that can cause significant damage, many vehicle owners faced unexpected expenses in July 2024 due to damage caused by storms, hail, and floods. It is estimated that over 20,000 vehicles in Serbia suffered some form of damage during this period due to severe weather, and according to insurance companies, more than 70% of claims were related to storm and hail damage. The total cost of damages to vehicles covered by comprehensive insurance was estimated at over 500 million dinars. While unfortunately, severe weather cannot be avoided, its financial consequences can certainly be mitigated. In such cases, obtaining the appropriate insurance policy is of utmost importance.
Comprehensive insurance is a type of coverage that provides protection for motor vehicles against various risks, including damages not covered by mandatory liability insurance. Unlike basic insurance, which covers damage inflicted on third parties, comprehensive insurance covers damage to the insured's vehicle itself, including damages caused by severe weather. Although the comprehensive insurance market is growing, Serbia has a relatively low percentage of vehicles insured with comprehensive coverage - less than 10% - compared to Western European countries.
The total premium for comprehensive insurance in Serbia in 2023 amounted to just over 16 billion dinars, with the most common risks covered and for which claims were submitted being traffic accidents (around 60% of all claims), theft (around 20%), and natural disasters (around 10%).
Crop Damage Insurance
Although agriculture is one of the significant contributors to the overall economic environment in Serbia, the insurance of this valuable sector remains at a relatively low level, especially considering the extent of damage that crops can suffer. The amount of damage is a topic of discussion, but since our last review of this issue, between the “supercell” storms of 2023 and this July, little has changed. The biggest issue in not insuring agricultural production, both then and now, is cited as the lack of information among producers and low confidence in the insurance process itself and the adequate compensation for damages, should they occur.
Property Insurance for Citizens
Responsible management of property by citizens requires appropriate protection against a range of risks, including fire, lightning strikes, explosions, storms, hail, floods and torrents, water leakage from installations, burglary, robbery, glass damage, and other unforeseen events. According to statistical data, property insurance has shown stable growth, with the National Bank of Serbia reporting an annual growth of around 13% in property insurance premiums from 2022 to 2023. This certainly indicates an increased awareness of the importance of property insurance among citizens and businesses in Serbia.
Another storm is behind us. Although insurance deals with uncertain future events, new storms with similar consequences are inevitable. This gap between theoretical and practical risk offers each of us the opportunity to reflect on risk mitigation options and protection and choose the best solution for ourselves.
EuroSolutions is at your service to put its expertise in risk assessment and the creation of adequate solutions at the service of an insured future.