ECJ EUROPEAN Cleaning Journal

Europe was pounded by its worst rainstorms on record last year, swamping vast areas from Spain to Poland and costing economies billions of euros. With extreme flood events becoming ever more frequent, Hartley Milner explores their impacts on the continent’s smaller businesses.

Having unleashed its fury across large swathes of central Europe, Storm Boris was now barrelling menacingly eastwards. In the historic Polish town of K?odzko, restaurant owner Jurek Bochenek was taking no chances, the catastrophic floods of previous years etched deep in his memory.Jurek adopted a siege mentality.

After cancelling the evening’s bookings and sending his staff home, he pulled down the shutters, checked his flood defences and went up to bed. But it was to be a turbulent night with the rain’s incessant thrumming instilling in him a churning dread of what the morning would bring.

Daybreak confirmed his worst fears as he squinted through the sheeting rain to the road below … or rather the seething river it had become. “It was the last thing I wanted to see,” he told ECJ. “The entire street was awash. As fast as the rain was coming down it was bubbling up again from the drains like fountains. The drainage system had been overwhelmed in just a few hours. It was chaos.

“Yet there were people out in all this attempting to drive to work, despite being told to stay home. What worried me most was the wash from heavy vehicles splashing up against shop frontages and over the sandbags people had put out. I had hoped that if the sandbags failed the flood-resistant doors and windows I installed after previous floods would have done their job.

“But when I got downstairs I found myself wading up to my ankles in filthy water and it just kept rising. I managed to move most of the restaurant furniture and some kitchen equipment upstairs to our living area. Unfortunately, I couldn’t save the food in the freezers because I had to turn off the electricity.”

After several days of almost continuous rain, the storm passed revealing the full extent of the damage. “The water had come up the walls by over a metre in every room on the ground floor, including the restaurant area,” Jurek said. “Worse still, it smelt of sewage, which is every food caterer’s worst nightmare at times like these. The smell was so bad we had to move out and stay with friends. I felt sick, not only from the smell but also thinking about the clean-up bill for all this.”

K?odzko was dealt a second blow when a dam burst on Poland’s border with the Czech Republic, further swelling the surging waters and prompting the mayor to announce that the town had “lost the battle” against the floods. In all, 17,000 people were left without power and many others were evacuated. Satellite links were used to maintain mobile phone and internet communications. Across Poland, the storm claimed nine lives.

Funding package

A similar pattern of destruction unfolded across other regions of central and eastern Europe, including Austria, Germany, Italy, Slovakia, Hungary and Romania. Power outages, road and rail transport disruption were widespread and businesses were disrupted or forced to shut down, some very likely for good. In all, 27 people died after more than a month’s worth of rain was dumped on the continent in just four days.

European Commission president Ursula von der Leyen responded to the emergency by announcing a €10 billion funding package to support EU countries with their clean-up operations and passed on her “deep sympathies” to victims. However heartfelt her commiserations, they would have brought little comfort to businesses whose focus had by then turned to practical issues such as redeeming their insured losses.

This was certainly uppermost in restaurateur Jurek’s mind. He said: “It was the worst flooding I can recall since 1997 and 2010. Fortunately, I am covered for natural disasters and the assessors fast-tracked my claim, including for loss of income and other disruption. That was all good with Christmas coming up, which is our busiest time. But I am expecting my premium to shoot up next year, which means I will have to serve a lot more meals and takeaways in future.

“I know of other businesses that were not covered for flood risk, either because they couldn’t afford it or their insurance provider didn’t offer it. They say they are desperately worried about how they are going to pay for repairs to their premises, and we are told events like these are only going to become more frequent and severe in coming years.”

Economic fallout

Insured losses from the September floods were estimated by global reinsurance broker Gallagher Re at around €2 billion-€3 billion. UK professional services firm Aon said its impact on the Czech Republic, Poland and Austria could make it “one of the costliest events ever recorded” on the continent. And that was before floods swept tsunami-like across the Spanish municipality of Valencia in late October when a year’s worth of rain fell in just eight hours. They took a huge toll in terms of lives lost and economic fallout.The true cost of storm damage in Europe this year will probably never be known. Only about 25 per cent of weather and climate-related losses are insured in the region, according to EU insurance regulator the European Insurance and Occupational Pensions Authority (EIOPA).

“This large insurance protection gap has a detrimental impact on Europe’s economy and its citizens,” it said. “As losses are set to increase, the shrinking availability and rising cost of insurance will only widen the protection gap, amplifying the economic costs, systemic risks and fiscal pressure on governments.”

EIOPA chairwoman Petra Hielkema criticised insurers for their inclination to simply exclude high-risk flood areas from coverage as an easy solution and warned that this could erode their foundational purpose. “If you do that, you will, in the end, lose trust and lose your reason to be there,” she told the industry.In a move towards more affordable premiums, EIOPA proposes striking
public-private partnerships, with governments and the insurance sector sharing the burden. Plus, with one in eight Europeans living in flood-risk areas, it has been looking at ways to boost consumer uptake of natural catastrophe cover. These include educating people about climate risks, promoting more equitable insurance products and offering incentives like premium discounts on risk mitigation measures.

Many of EIOPA’s proposals are included in the final report of the Climate Resilience Dialogue, a stakeholder group set up in 2021 by the European Commission comprising insurers and risk managers, public authorities and consumers. Its remit was to debate solutions to narrow the climate protection gap and increase the resilience of economies and societies against climate change impacts.

The report:

• provides an overview of the main climate-related risks to which people, businesses and assets are exposed;

• analysis of key causes of the climate protection gap, such as premium affordability, mistrust of insurance and limits to the insurability of risks;

• analysis of risk reduction solutions, including risk sharing and risk transfer via public-private partnerships, and insurance-based measures to overcome barriers thrown up by the protection gap;

• deep dives into climate-related risks – floods, wildfires, heatwaves, droughts and storms – and learning from past events to increase climate resilience.

The EU is aiming to become climate resilient by 2050. However, the bloc needs to be more ambitious, according to SMEunited. The employers’ association says small and medium-sized businesses can play a vital role in tackling global warming, but stresses they are among the most vulnerable to extreme weather events. The EU must therefore “accelerate its efforts on all levels” to close the climate protection gap and urgently take firm actions to reach its climate resilience targets.

Platform proposal

SMEunited suggests using case studies where smaller enterprises have already applied innovative adaptation solutions to show the way for others. Businesses also need to be better supported in their resilience transition at both EU and national level in terms of know-how and skilling up. To this ends, the association is proposing the European Commission set up a ‘one-stop’ climate resilience hub.

“The creation of a European climate resilience platform is essential to foster collaboration across sectors and civil society and to ensure that the best available knowledge and tools are shared widely,” said Andreas Brieger, SMEunited’s director for climate, energy and environment. “Such platforms can help foster the resilience we need to face the challenges ahead,” he added.

Addressing the European Roundtable on Climate Risk Management, Brieger also flagged the need for financial support, saying that climate resilience investments are often expensive and
many SMEs struggle to access adequate funding. Delegates added their voice to the call for public-private partnerships to ensure SMEs have the financial resources they need to implement climate adaptation strategies.

Europe’s devastating floods provide a stark glimpse of the future for the world’s fastest-warming continent, scientists say. SMEs account for 99.8 per cent of enterprises in the EU’s non-financial business sector, so getting them onside will be critical if the region is to achieve its climate targets.