Insurance companies to compensate only small portion of flood damage

Ministry preparing supplementary budget for flood compensation

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Insurance companies will compensate their clients for only a small part of the damages they suffered during the recent bout of floods.
      Esko Kivisaari, the Managing Director of the Federation of Finnish Insurance Companies, estimates that 10-20 percent of the policy-holders who incurred damage will be compensated by their insurance.
      Regular property and casualty insurance policies do not cover damages caused by floods of this nature. In fact, flooding in any other parts of the country than Ostrobothnia has been practically unheard of in the past.
     
According to the insurance companies, they cannot assume responsibility for situations where floods occur in the same region annually. The Federation of Finnish Insurance Companies also points out that the state is the principal source of flood compensation in most European countries.
      Some broader home insurance policies may cover damage caused by rainwater if the cause of the damage lies in the poor capacity of drains. In these cases, the buildings must also be constructed according to all regulations for the insurers to consider claims.
      Insurance company Pohjola has already received around two hundred applications for flood compensation, and residents in the affected areas have actively enquired about their situation.
     
Citizens can apply for compensation from the state. In practice, money is paid out only for floods that are repeated at most once in every twenty years.
      A working group of the Ministry of Agriculture and Forestry has proposed that the criteria be tightened so that compensation would only be paid for flood damages that occur once in a century. This would not be retroactive, however, but would only relate to new properties, thereby discouraging people from building in areas that might be aesthetically attractive but prone to flooding.
      Some 840,000 euros have been allocated to flood damages in this year's state budget. This summer's damage has been estimated to total between eight and ten million euros. This figure includes the damage to buildings, roads, and bridges.
      The Ministry of Agriculture and Forestry will provide the Ministry of Finance with its proposal for a supplementary budget for flood compensation in a couple of weeks.
      Applications for compensation must be lodged within one month of the damage with municipal agricultural authorities.


Previously in HS International Edition:
  Flood victims wonder how to survive until State compensation payments (10.8.2004)
  Oxygen depletion kills fish in Vantaa River - flood damage more costly than expected (9.8.2004)

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