800,000 homes with uninsurable subsidence risk, climate damage often not covered

The Netherlands Authority for the Financial Markets (AFM) warns against this in a report published today.

Uninsurable damage

According to the regulator, the government and insurers must work together to find solutions for uninsurable damage resulting from climate change. This concerns, for example, subsidence of houses due to prolonged drought, or damage after flooding.

Insurers must also make it clear to their customers which damages will and will not be reimbursed, according to the AFM.


After the floods in Limburg earlier this year, the damage was enormous. In some cases, entrepreneurs were not aware that they were not insured for this. The government has established compensation to help citizens and businesses in the affected area.

Climate change is increasing the risk of extreme weather. The damage caused by floods in the first ten years of this century in the European Union averaged EUR 4 billion per year. According to estimates by climate researchers, this will rise to 23 billion euros per year by 2050.

Housing subsidence

The AFM mentions residential subsidence as an example of uninsurable damage caused by climate change. In 2016, four insurers still covered this risk. Since last year, none have done that anymore, while the Netherlands is increasingly faced with prolonged periods of drought and therefore risks of subsidence.

“An estimated 800,000 homes are at risk of subsidence and collapse if the groundwater level falls,” the regulator writes in a statement.

The financial consequences of this can be enormous with an average damage amount of 64,000 euros. The AFM advises consumers in risk areas to take this into account in their financial planning when buying a house there.

According to an earlier study by Ecorys, commissioned by the Ministry of Infrastructure and Water Management, this concerns buildings with wooden pile foundations. These were mainly applied before 1890 in historic cities such as Amsterdam, Rotterdam, Gouda, Delft, Leiden, Zaanstad and Haarlem and from 1890 to 1970 in areas where the soil is prone to subsidence.

Study the policy conditions

The AFM notes that the policy conditions of non-life insurance are not always clear about the coverage of damage as a result of climate change. “Consumers are now dealing with complex policies with limitations, exclusions, prevention requirements and changing conditions.”

Because there are large differences between the policies, consumers should take a good look at what climate-related coverage their insurance policy has, the regulator recommends.

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