Basic protection for all: Insurers present framework for a safeguard system against natural catastrophes

“Climate-related damages in Germany have increased fivefold since 1980. Our goal is a safeguard system that works permanently: 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,” says Jörg Asmussen, CEO of the German Insurance Association (GDV). “But it is also clear: insurance alone is not enough. Without consistent prevention, risks will continue to rise — and that threatens the entire system.”

The model starts from two core questions: how protection against natural catastrophe can remain insurable and affordable in the long term and how can risk-sharing with the state work in the event of extreme natural disasters. The coalition agreement sets important guidelines for this. With the Elementar Re model, insurers are, for the first time, presenting a concrete proposal for how a nationwide safeguard system in Germany could be designed. The proposal is intended to serve as a professional impetus for political and societal dialogue.

Elementar Re pools high-risk buildings and keeps protection affordable

More than 400,000 residential buildings in Germany are in areas where risk-based premiums would be difficult to afford. Elementar Re pools these high-risk buildings, enabling continued insurance coverage even in challenging risk situations.

Primary insurers can transfer policies for these houses to Elementar Re. Premiums will be capped at a maximum level, scaled according to building size. The difference can be financed through a small, broadly distributed adjustment.

“With Elementar Re, we keep even the most exposed houses insurable and affordable — financed in solidarity, without distorting the market,” says Anja Käfer-Rohrbach, Deputy CEO of GDV.

Government-backed stop-loss as last resort

In the event of a claim, Elementar Re has two private-sector safeguard levels: its own reinsurance and a gradually built-up reserve fund. These are supplemented by a state stop-loss mechanism that applies only in rare extreme events — when private reserves are largely exhausted. The state does not act as a primary insurer or permanent reinsurer. Rather, the approach follows the coalition agreement’s idea of a state-supported reinsurance solution that complements the market without replacing it. This clearly defined mechanism provides a targeted safety net for exceptionally severe catastrophes with damage volumes exceeding €30 billion.

Prevention and natural catastrophe insurance with opt-out as a Basis

The coalition agreement also aims for the broadest possible natural catastrophe insurance coverage. The insurance industry embraces this political impulse: natural catastrophe protection becomes the default — but no one is forced to buy it. For new policies, coverage is included automatically; for existing policies, a one-time, legally regulated switch occurs by a set date. In both cases, there is an opt-out option. Those who opt out also declare that they will not seek state aid in the event of a loss. From the insurers’ perspective, this approach significantly increases insurance penetration while preserving contractual freedom and avoiding the downsides of mandatory insurance.

Comprehensive and sustainable natural catastrophe insurance is only possible if effective prevention measures are consistently implemented. These form the indispensable foundation of the overall concept. This includes binding rules for building in catastrophe zones, mandatory risk assessments for new constructions, and maximum transparency about local risks — such as through a nationwide natural catastrophe portal and a statutory natural catastrophe certificate for buildings. Only if risks are identified early and considered in construction, can insurance coverage be offered sustainably and damages effectively limited.

In summary: Elementar Re can only unfold its full impact as part of an integrated natural catastrophe concept—with broad insurance coverage, consistent prevention, and climate adaptation.