June 6, 2016 / 1:38 PM / a year ago

French government promises aid to flood victims as cost to insurers rises

PARIS (Reuters) - The French government will disburse millions of euros in emergency funds to help those people hardest hit by flooding, Prime Minister Manuel Valls said on Monday, while the bill for insurers was seen rising above 600 million euros ($681 million).

Residents who refused to be evacuated sit on makeshift boats during evacuation operations of the Villeneuve-Trillage flooded suburb in Villeneuve Saint-Georges, outside Paris, France, June 3, 2016 after days of almost non-stop rain caused flooding in the country. REUTERS/Christian Hartmann

Floods from days of unusually torrential rain have killed two people, injured 24 and forced thousands to evacuate their homes and Paris museums to move artworks to safety.

“The government has decided to mobilize an emergency fund of tens of million euros for those without resources who have lost everything in this disaster,” Valls said on Monday.

“We estimate that it would cost insurers 600 to 800 million euros, while the total cost of damages would be around 1 to 1.2 billion euros,” said Yorik Baunay, head of Ubyrisk Consultants, a consulting firm specializing in natural catastrophes.

However, this burden would be partly covered by state-backed reinsurer CCR.

Floods in France between 2001 and 2015 cost insurers around 7 billion euros between, according to Ubyrisk Consultants.

In France, insurers usually have three months to indemnify clients after the cost of damage is calculated. CCR, a public-sector reinsurer which covers French insurers against natural catastrophes and other uninsurable risks, steps in when a state of natural disaster is declared.

It is expected to be declared on Wednesday. CCR would then pay 50 percent or more of the total amount of losses.

A typical flood claim costs 5,000 to 7,000 euros in France. However, this rises to about 20,000 euros in Paris, Baunay said.

French insurance industry association AFA said on Friday that the heavy flooding of the past week could cost French insurance companies 600 million euros or more.

Valls said several more days were needed to estimate the damage caused by the floods, as the return to normality would take time.

Reporting by Maya Nikolaeva, Ingrid Melander, Jean-Baptiste Vey and Matthieu Protard; Editing by Mark Heinrich

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