Germany’s insurance industry has outlined a proposed natural catastrophe reinsurance vehicle, Elementar Re, designed to act as a backstop for primary carriers facing rising climate-related losses.
The concept, released by the German Insurance Association (GDV), centers on pooling high-risk residential properties and adding a state-supported layer of protection for extreme events.
Elementar Re is intended to group buildings with elevated natural peril exposure and help keep coverage available and affordable nationwide over the long term, the GDV said. The framework would apply across Germany and is meant to address risks such as floods and other climate-driven events.
“Climate-related damages in Germany have increased fivefold since 1980,” GDV chief executive Jörg Asmussen said in a statement. He described the industry’s goal as a “safeguard system that works permanently: fair for homeowners, stable for the market and sustainable for the public sector.”
Asmussen added that insurance on its own is not sufficient to address the changing risk environment. “Without consistent prevention, risks will continue to rise, and that threatens the entire system,” he said, pointing to the need for stronger risk mitigation alongside financial protection.
The association estimates that more than 400,000 residential buildings in Germany are in areas where fully risk-based premiums would be difficult for policyholders to afford. Under the Elementar Re design, these high-risk homes would be pooled so that coverage can continue even in challenging risk situations.
Primary insurers could transfer portfolios of these properties into Elementar Re, according to the GDV. Premiums for the scheme would be capped at a maximum level and adjusted by building size, with any remaining gap financed through what the association describes as a small, broadly distributed contribution.
“With Elementar Re, we keep even the most exposed houses insurable and affordable, financed in solidarity, without distorting the market,” said Anja Käfer-Rohrbach, deputy CEO of the GDV. She said the approach is intended to combine risk-based pricing with collective funding for the highest-risk segment.
Elementar Re would sit on top of existing market capacity as a government-backed stop-loss structure of last resort, the association said. In the event of claims, the scheme would first rely on its own reinsurance arrangements and a gradually accumulated reserve fund.
These private-sector layers would then be supplemented by a state stop-loss mechanism that would activate only in rare, severe catastrophes “when private reserves are largely exhausted,” according to the GDV.
The association said the state would not serve as a primary insurer or a standing reinsurer, but would support a reinsurance solution that complements rather than replaces market capacity.
The German proposal comes as policymakers in other markets weigh similar backstop concepts for natural catastrophe risk. In the US, the proposed Natural Disaster Risk Reinsurance Act would create a federal catastrophic reinsurance backstop that caps what insurers pay for disaster claims and uses post-event bonds, repaid over 10 years through temporary surcharges, to help states manage losses that exceed a set reinsurance cap.
Approaches to public support for catastrophe risk differ by jurisdiction, underscoring the policy choices facing Germany.
In Florida, lawmakers have recently reduced hurricane reinsurance support by cutting the Reinsurance to Assist Policyholders (RAP) program’s transfer limit from US$2 billion to US$900 million and repealing the Florida Optional Reinsurance Assistance (FORA) program, a move expected to shift more catastrophe capacity needs back to the private reinsurance market.
