The destruction wreaked by Spain’s deadliest floods in a generation in one of the country’s most important regions for tourism, agriculture and commerce is set to leave a huge bill for the state and the insurance sector.
Last week’s catastrophe that has killed more than 210 people nationwide gutted buildings, swept away cars, inundated fields, and wrecked transport and power infrastructure in the wealthy eastern Valencia region.
The European country now faces its ‘biggest disaster for a climate event’, said Mirenchu del Valle Schaan, president of the Spanish insurers’ federation UNESPA.
It is 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, José Vicente Morata, told the same channel that the final bill would be well north of €10 billion.
For comparison, the devastating July 2021 floods that claimed more than 200 lives across five countries – Germany, Belgium, France, Austria and the Netherlands – cost almost $43 billion, according to reinsurer Swiss Re.
The public finances of the Spanish state – already straining to bring its deficit down in line with EU spending rules – and the Valencia region will be stretched.
The regional government has proposed an aid package of €250 million, tax breaks and compensation for businesses.
Clearing debris and reconstructing obliterated infrastructure will also be financed with the central government, which has estimated those works at €2.6 billion.
An estimated 4,500 businesses located on the ground floors of buildings submerged by mud and water were affected, according to the Valencia Chamber of Commerce.
Dozens of shopping centres and industrial estates that are home to small and medium-sized businesses were damaged and transport companies lost their lorries.
The flooding of fields dealt a heavy blow to agriculture in the Valencia region, one of Spain’s major citrus fruit exporter.
Regional agricultural trade union La Unio has estimated 50,000 hectares of crops were affected.
Agroseguro, which manages Spanish agriculture insurance, believes the cost could rise to €150 million in the sector. Trade union Asaja described the losses as ‘catastrophic’ with ‘incalculable consequences’.
Spanish insurers rely on a common fund managed by the CCS that shares the cost across the sector in the event of a natural disaster.
The CCS therefore covers most of the compensation and insurers only directly pay out for peripheral damage in areas unaffected by the floods.
Some 46,000 claims were submitted in just five days, said Economy Minister Carlos Cuerpo, who hopes for the first payouts this week.
ALSO READ: Spanish royals, PM and regional president pelted with mud by flood survivors.
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