The devastation wrought on one of the country’s economic engines by Spain’s deadliest floods in a generation will leave a huge bill for the state and the insurance sector.
Last week’s catastrophe, which killed more than 210 people across the country, gutted buildings, swept away cars, flooded fields and destroyed transport and energy infrastructure in the prosperous eastern Valencia region.
The European country is now facing its “worst disaster for a climate event,” said Mirenchu del Valle Schaan, president of the Spanish insurers federation UNESPA.
It is still too early to estimate the total costs, but they will undoubtedly be “extremely high,” Celedonio Villamayor, director of the CCS consortium responsible for paying out compensation after natural disasters, told public broadcaster TVE.
The head of the Valencia Chamber of Commerce, Jose Vicente Morata, told the same channel that the final bill would be well over 10 billion euros.
By comparison, the devastating floods of July 2021, which claimed more than 200 lives in Germany, Belgium, France, Austria and the Netherlands, cost almost $43 billion, according to reinsurer Swiss Re.
The public finances of the Spanish state – which is already struggling to reduce its budget deficit in line with EU spending rules – and the Valencia region will come under pressure.
The regional government has proposed a support package of 250 million euros ($272 million), tax breaks and compensation for companies.
Clearing rubble and reconstructing the destroyed infrastructure will also be funded by the central government, which has valued this work at €2.6 billion.
– ‘Incalculable consequences’ –
An estimated 4,500 businesses on the ground floors of buildings submerged by mud and water have been affected, according to the Valencia Chamber of Commerce.
Dozens of shopping centers and industrial estates housing small and medium-sized businesses were damaged and transport companies lost their trucks.
One of the smaller companies to calculate the costs was BassMotor, a cleaning equipment company in the Valencia region whose shares were swallowed up by the floods.
After clearing the mud, the company is eagerly awaiting the government’s response, “which doesn’t seem to be making much progress at the moment,” spokesman Diego Navarro Rodriguez told AFP.
If immediate relief is not forthcoming, “layoffs and closures will follow,” Morata warned.
The flooding of fields has dealt a heavy blow to agriculture in the Valencia region, one of Spain’s breadbaskets and a major exporter of citrus fruit.
The regional agricultural union La Unio estimates that 50,000 hectares of crops have been affected.
Agroseguro, which manages Spanish agricultural insurance, believes costs in the sector could reach 150 million euros. Trade union Asaja described the losses as ‘catastrophic’ with ‘incalculable consequences’.
Spanish insurers rely on a common fund managed by the CCS that spreads costs across the sector in the event of a natural disaster.
The CCS therefore covers the majority of damages and insurers only pay out directly for peripheral damage in areas not affected by the floods.
The system is “perfectly prepared to deal with these types of situations,” said UNESCO head del Valle Schaan.
Some 46,000 claims have been filed in just five days, said Economy Minister Carlos Cuerpo, who hopes for the first payouts this week.
vab/imm/lth
