The Netherlands: Flooding, climate change and insurance

Aerial from sluices at Kronwerderzand at the Afsluitdijk in the Netherland
Author:  Mark Frost, Climate Resilience

Following the ECB’s economy-wide climate stress test – which highlights the benefits of acting early – organisations across Europe have been advised to introduce measures to mitigate risks caused by climate change.

The low-lying Netherlands combines a long history of flood risk with limited insurance coverage. As natural disasters become more frequent, what action should insurers, financial institutions and other businesses there take to understand and mitigate their impact?

Flood risk in the Netherlands: increasing in frequency and severity

Faced with rising sea levels, frequent droughts and extreme rain, the Netherlands has already taken preventative measures by investing in strong flood defence systems – including wider riverbanks, coastal protections and an expansive network of dikes and levees.

The Delta Works – a system comprising 3 locks, 6 dams and 4 storm surge barriers – is the country’s largest flood defence system. Described by the Environment Agency as “awe-inspiring”, the system protects against vulnerability to flooding from the North Sea.

Despite these measures, the Netherlands is still at risk, especially as climate change disrupts traditional weather patterns, boosting the likelihood of flash flooding and other extreme weather events. This has increased the frequency of peaks in rainwater and meltwater, causing river levels in the Netherlands to rise. It’s also led to heavier summer showers and a higher risk of summer drought.

When flooding hit in the summer 2021, the Netherlands was one of many western European countries taken by surprise. Reportedly the wettest summer in the country’s history, the floods impacted a number of regions including the Limburg province – with the Dutch Association of Insurers, Verbond van Verzekeraars, estimating the insured damage at between €160 million and €250 million.

Understanding insurance and flooding in the Netherlands

In general, there is limited insurance coverage across the Netherlands. Our 2022 study for the Dutch Association of Insurers revealed that while personal lines are often insured – although not for primary defences – there is usually no commercial coverage.

After the Limburg flood – which involved damage to government property – the Dutch government passed the Reimbursement for Damages Due to Disasters Act. If declared applicable, partial compensation is available. However, the government has indicated that they will no longer apply the act to insurable flood events.

Instead, the government is looking to the insurance market to come up with a sustainable solution. As a result, it’s of growing importance that insurers understand which areas of the Netherlands might be at risk of possible future flood events.

Delta Works Daytime Panorama View
Delta Works 
Moreover, as the risk of natural hazards increases, there’s a corresponding rise in the damage burden on insurers. Without taking further measures to mitigate climate risk, the private damage caused by extreme precipitation and hail alone could double in the next few decades from a projected €125 million to €250 million.

How to mitigate the risks of climate change

Obtaining accurate data to understand flood risks – and the impact climate change has on this risk for the long term – is vital for insurers when it comes to underwriting, pricing risk and managing claims. Similarly, banks and investors need access to the best data to identify the impact on financing and portfolios.
climate risk assessment risk scores twinn dashboard
Twinn Climate Intelligence Suite

Leveraging innovative software, Twinn Hazard Map (formerly under the Ambiental brand) provides accurate and detailed predictive data that outlines how potential floods will develop, and a wide range of other natural hazards are also available. Identifying at-risk properties and delivering country-wide flood risk information, it can give you flood scores down to individual property level, which helps insurers accurately price risk.

And our expertise doesn’t just encompass flooding. Twinn Climate Risk Analytics provides climate risk intelligence encompassing 19 hazards – including pluvial, fluvial and coastal flooding as well as drought, wildfires, earthquakes, wind and volcanoes.

Outlining long-term risk to insurers, banks and other businesses, we identify areas vulnerable to change – delivering climate risk intelligence as well as physical and transition risks. As a result, we help organisations anticipate disruption from natural hazards, even protecting operations and reducing supply chain issues.

Searching for ways to deepen your understanding of the climate risks your Netherlands-based organisations is facing? Get in touch to find out more about how our climate risk intelligence platform helps you identify, control and mitigate risks.
Mark Frost - Senior Business Development Professional, Climate Resilience


Senior Business Development Professional, Climate Resilience