The destruction caused by the deadliest floods in a generation in Spain in one of the country’s economic engines will leave a huge bill for the State and the insurance sector.

Last week’s disaster, which has killed more than 210 people across the country, destroyed buildings, leveled cars, flooded fields and destroyed transport and energy infrastructure in the wealthy eastern region of Valencia.

The European country is now facing its “biggest disaster in a climate event,” said Mirenchu ​​del Valle Schaan, president of the Spanish insurance 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 in charge of paying compensation after natural disasters, told public television TVE.

The president of the Valencia Chamber of Commerce, José Vicente Morata, told the same channel that the final bill would exceed 10,000 million euros.

Read also

UN talks on saving nature hit financial hurdle

For comparison, the devastating July 2021 floods that claimed more than 200 lives in Germany, Belgium, France, Austria and the Netherlands cost nearly $43 billion, according to reinsurer Swiss Re.

The public finances of the Spanish state (already struggling to reduce its deficit in line with EU spending rules) and the Valencia region will come under pressure.

The regional government has proposed a 250 million euro ($272 million) aid package, tax breaks and compensation for businesses.

The cleaning of debris and the reconstruction of destroyed infrastructure will also be financed by the central government, which has estimated these works at 2.6 billion euros.

‘Incalculable consequences’

It is estimated that some 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 centers and industrial estates where small and medium-sized businesses are located were damaged and transport companies lost their trucks.

Read also

Kenya Newspaper Review: Rigathi Gachagua’s allies warn of hostile terrain for Kindiki as he takes office

Among the smaller companies that counted the cost was BassMotor, a cleaning equipment company in the Valencia region whose shares were devoured by the floods.

After cleaning up the mud, the company is anxiously awaiting the government’s response, “which at the moment does not seem to be making much progress,” spokesman Diego Navarro Rodríguez told AFP.

If immediate help does not arrive, “there will be layoffs and closures,” Morata warned.

The flooding of the fields dealt a severe blow to agriculture in the Valencia region, one of Spain’s breadbaskets and a major citrus exporter.

The regional agricultural union La Unión estimates that 50,000 hectares (123,500 acres) of crops were affected.

Agroseguro, which manages Spanish agricultural insurance, believes that the cost could rise to 150 million euros in the sector. The Asaja union called the losses “catastrophic” and “incalculable consequences.”

Spanish insurers depend on a common fund managed by the CCS that shares the cost among the entire sector in the event of a natural disaster.

Read also

Kenya reintroduces tax reforms with new vice president

Therefore, the CCS covers most of the compensation and insurers only pay directly for peripheral damage in areas not affected by the floods.

The system is “perfectly prepared to face this type of situation,” said the director of Unespa, from the Schaan Valley.

In just five days, some 46,000 applications were submitted, said Economy Minister Carlos Body, who expects the first payments this week.

Source: AFP