Insurers count cost of floods

Hitzacker was one of the towns flooded when the River Elbe broke its banks

FRANKFURT, Germany -- Germany's biggest insurance companies said losses associated with the flooding in Germany and central Europe could total about 1 billion euros ($990 million).

Allianz, Europe's biggest insurer, said on Thursday its net losses would total 550 million euros ($540.3 million), while the world's biggest reinsurer Munich Re expects losses "not exceeding" 500 million euro.

Unseasonal flooding brought chaos to Germany, Austria, Russia, the Czech Republic and Slovakia and claimed the lives of up to 100 people. Historic European cities such as Prague, Hamburg and Dresden are still counting the huge cost.

The cleanup and rebuilding operations are expected to cost about 20 billion euros ($20 billion) across Europe. Analysts have estimated the total economic losses, which includes loss of tourism and closure of businesses, could be as much as 15 billion euros, 15-20 percent of which could be insured.

IN-DEPTH Special report: Floods ravage Europe    MORE STORIES • Eyewitness: Towns, farmland devastated  • German floods head north  • Prague begins clear-up  • Despair and solidarity    EXTRA INFORMATION Gallery: Images of flooding  Map: Severely hit areas     QUICKVOTE Is it right that insurance premiums should rise to cover the costs of flood claims? Yes No View Results

"Due to our very strong market position in eastern Germany, Allianz bears the bulk of the insured losses in the regions affected," Allianz said in a statement on Thursday.

Allianz said it gross losses in Germany amounted to 580 million euros, 120 million euros in Austria and about 115 million euros in the Czech Republic.

The European Commission, the executive arm of the European Union, has already allocated 516 million euros ($516 million) in advance aid for German farmers and more than 55 million euros for the Czech Republic.

On Wednesday, EC President Romano Prodi proposed a new fund for "natural, technological and environmental catastrophes." He said it could reach one billion euros.

"This will be an expression of European solidarity," Prodi said after the European Union executive announced that it would form the fund.

He said 500 million euros would initially go into the fund, which he expected to be available for disaster relief. "The fund could be doubled in future years," he said.

It would be available for member EU states as well as those negotiating entry, such as the Czech Republic, he said.

Prodi said he hoped the European Parliament and EU member states would agree to the formation of the fund and that it could be set up as quickly as possibly.

The German government has promised $500 million in immediate aid and $6.9 billion over the long term.

It also announced a delay in tax cuts, due to take effect in 2003, to help pay for reconstruction.

Residents fought to save property in Budapest

According to preliminary estimates, the total damage in Prague could climb as high as 90 billion Czech crowns ($2.83 billion).

On Monday, the government's Central Bohemian Crises Headquarters set the first, direct cost of the rescue work and emergency measures at 77.9 million Czech crowns.

The Czech Association of Insurance Agencies (CAP) has so far registered approximately 130,000 claims. They estimate the total cost for those claims will be 19 billion crowns.