European flood losses are shifting beyond traditional hotspots and increasingly occur outside major urban centres, creating new accumulation challenges for insurers, according to Gallagher Re and catastrophe modeller KatRisk.

In a report – A Risk in Flux: Exploring Europe’s Changing Flood Reality for Insurers – the pair say investment in defences and resilience measures has reduced losses in many historically flood-prone urban centres, but risk is increasingly dispersed.

Insurers face greater loss potential from rainfall-led floods in smaller catchments, suburban developments and places outside major river corridors, and they must identify new concentrations of exposure, assess portfolio risk and make more informed underwriting, reinsurance and capital allocation decisions.

The report draws on analysis of KatRisk’s high-resolution flood hazard and defence data sets, and Gallagher Re’s Europe Flood Model.

“For many years, the industry’s understanding of European flood risk has been shaped by experience of major river flood events,” Gallgher Re head of international property practice Dave Egan said. “While those risks remain important, today’s loss landscape is increasingly being influenced by rainfall-driven flooding affecting smaller communities and catchments beyond traditional flood zones.

“As exposure continues to grow across Europe, insurers need a more forward-looking view of flood risk that goes beyond historical loss experience.”

German Insurance Association analysis shows that, of the country’s 37 largest flood-related insurance events since 2002, 32 were heavy rainfall/flash flooding pluvial events. Only five were primarily driven by river flooding.

While Storm Bernd in 2021 mostly affected small river catchments and communities with populations below 50,000, it generated more than €10 billion ($16.16 billion) of indexed insured losses, becoming the costliest flood event in modern German insurance history.

The paper also highlights the value of flood defences. During Storm Boris in 2024, flood defences reduced losses by up to 50%, it says.