As the largest – or, in the case of monopoly insurers, even the sole – property insurers in their regions, the shareholders of Deutsche Rück were repeatedly heavily affected by severe storms. Thus, while premium income rose sharply year after year, losses did as well.

North Sea flood – Hamburg 1962

The North Sea flood of 1962 demonstrated the scale of natural catastrophe risk at Deutsche Rück. Parts of the Hanseatic city Hamburg were under water at the time. More than 300 people died.

The map clearly shows the extent of the flooded area caused by the North Sea flood of 1962.

The images of the flood disaster became deeply ingrained in Germany’s post-war memory. Through the storm insurance of its shareholders in the affected federal states (Brandkasse Kiel, Feuerkasse Hamburg, Brandkasse Hannover), Deutsche Rück was also significantly affected. It paid gross claims of 6.2 million DM and recorded a loss ratio of 75 percent.

North Sea flood – Hamburg 1962

Fire Insurance Business Under Pressure

Even at that time, the executive board warned of the risks facing the company as a pure single-line insurer. A poor fire insurance year combined with high natural catastrophe losses from storms and hail could place a significant strain on the company. From the late 1960s onwards, the fire insurance business came under pressure across the market. And the sharp rise in inflation in Germany also led to a significant increase in claims.

The oil crisis at the beginning of the 1970s clearly marked the end of the economic miracle and the onset of crisis. Consumers felt the effects directly at the petrol station. While they paid 57.1 pfennigs per litre of diesel in 1970, by 1980 they had to pay 117.0 pfennigs per litre – more than double. (Average fuel prices, pfennigs per litre, source: ADAC e.V.)

The ongoing oil crisis of 1973 led to fuel shortages and rising prices for petrol and diesel.

In 1970, fire losses in the market reached a historic peak: In the “catastrophe year of fire insurance”, Deutsche Rück had to absorb a gross loss ratio of 116 percent. To balance the books, the company had to draw on its reserves.

Rising Loss Ratios

At the same time, major storm events in the 1970s led to unprecedented levels of losses: The “Lower Saxony storm” of 1972 drove the loss ratio in storm reinsurance up to 187 percent. The largest loss event to date, the “Capella storm” in 1976, resulted in a technical loss of 57 million DM.

The storm QUIMBURGA caused significant damage in Lower Saxony in 1972. This rustic house in Annen was also severely damaged.

Dealing with natural catastrophe risks has been one of Deutsche Rück’s core tasks from the very beginning. Over many decades, it therefore developed particular expertise in this field.

CAPELLA Storm: With hardly any ebb tide, waves piled up metres high on the afternoon of 3 January 1976. Large areas were flooded, particularly in the Lower Saxon municipality of Drochtersen.