The Rhine falls in a heat wave, which brings about the beginnings – Artemis.bm

The water level in the Rhine River in Germany has dropped to the point where shipping and handling companies, as well as those looking to sell and receive goods using the waterway, are predicted to decrease near the point where we understand that insurance triggers are in place. .

As of this morning, Thursday July 21st, the water level at the Kaub bottleneck, the most famous and shallowest point along the Rhine and the fastest to break, is said to be at 71 centimeters, after dropping to 68 centimeters late yesterday.

This is said to be the lowest level of water in the bottle since at least 2007, according to German government data and even now it is costing shipping on the Rhine.

Water levels in the Rhine are expected to drop significantly:

The low water level means that ships cannot travel as heavy as they should be, raising the cost and according to a recent report by Bloomberg if the level reaches 40 centimeters it can be considered uneconomical for anything heavy to be carried on the river.

Most of Germany’s exports cross the Rhine at some point in its journey, meaning that a low river can put high-quality trade at risk.

The drop in water has a major impact on shipping and handling goods, with companies paying more for alternative modes of transportation.

In addition, when the river levels decrease, shipping costs increase and on the Rhine in Germany there are additional costs to pay for cargo when the water drops below a certain level, or more ships can be used. reduce cargo and allow ships to navigate shallow waters.

As a result, companies that want to send their goods, or expect to send goods, with water on the Rhine, can face a lot of money and costs when the river falls.

Which is a non-destructive business interruption risk, driven by climate and environment, one of which parametric insurance is often useful in covering.

Of course, low water levels due to prolonged drought, or extreme heat, can also damage property, as well as damage property.

In such cases traditional insurance premiums may not provide as much compensation as risk managers would like to receive, making additional informational cover based on river knowledge a useful tool to facilitate risk transfer.

It is worth considering the economic impact of the decline in traffic and trade on the Rhine, because this can lead to lower prices on goods from construction materials to energy.

The previous period when the Rhine became less navigable due to water shortages is said to have resulted in a 0.5% hit to Germany’s GDP.

With the current low prices and strong energy crisis in Europe, it could make the disruption of non-destructive businesses a priority for companies across the region this year.

In the past, low water levels in the Rhine have been cited as the cause of the recession, while low rivers in 2018 caused economic problems in Germany in 2019.

It has also been suggested that the shortage of water in the Rhine is the cause of the disruption of all manufacturing sectors in Germany, due to the importance of river trade in the country.

Therefore insurance and reinsurance companies have developed parametric insurance and risk-based products based on the volume of water in the Rhine.

We understand that among those selling such products to clients, have been traders Guy Carpenter and Aon, as well as markets including international insurance company Swiss Re’ Corporate Solutions and AXA Climate, a division of global security experts.

We are sure that some medical professionals will also sell parametric risk transfer as a non-destructive business cover against the increasing number of water drops in the world’s most important water supply.

We are currently being told that the river would have to drop significantly for any triggers to break through, but as Germany has suffered from the heat in recent days and low river levels, this could be a risk for those who have a problem with rain. capital deployment and risk.

Finally, the way water hinders trade along the Rhine also has many problems in insurance and insurance, with the possibility of disruption of the supply chain and therefore business policies may also see claims if the water continues to fall.