Kuban: who will pay for the flooding?

The victims of the July floods in Kuban are not only those who died, but also people who lost all their property. There are 1300 such people in Krymsk. According to norms, those who lost their homes can expect new apartments from 18 to 33 m2 per person, depending on the number of family members.

Nikolai Vasyutin, deputy director of the housing and community amenities department of the Ministry for Regional Development

450 people have already decided to settle in new flats in five towns of Stavropol Territory. Others are still thinking it over, a majority of them prefer to live in cottages. At the moment we are searching for three areas. In several days preliminary work will be started…

Community infrastructure also suffered. 15 boiler-houses out of 52 in Krymsk are in bad condition. Significant resources will be needed for their reconstruction, no less than 353 million rubles.

For reconstruction of social infrastructure facilities (libraries, schools, hospitals, rest homes, kindergartens) more than 500 million rubles are needed. The whole sum is equal to about 5.5 billion rubles.

The state has allocated 3.8 billion in compensation for people’s deaths and loss of property. They are being paid at the moment. Today 29.5 thousand people have been recognized as victims of flooding. 21.5 thousand people have already received financial support. People will also get 10 thousand rubles each from the regional budget.

Andrey Kigim, the chairman of All-Russian Insurance Union

More than 14 insurance companies are participating in settlement of the cases. The cases are mostly about property of individuals. The advantage is that the state meets us halfway, considering the situation two years ago when people suffered from fires, the insurance company paid, but the state gave more, and people were refused from our payment from getting government support. The order that was made was implemented by state bodies. That is why insurance compensation doesn’t reduce state financial support. The consumer should realize this. It is a serious moment. If some problems appear, people should address the regional commissions.

Comprehensive and Collision Insurance is a great problem. Cars cannot be saved, and Krasnodar thinks we should actively cooperate with insurance companies of the region to understand whether we should involve assessment groups or whether we should make quick decisions by ourselves.

There is an even more difficult question about properties of private business. The Sayano–Shushenskaya Dam example showed businessmen that they should insure their property. And here the Emergency Ministry and the Ministry for Regional Development should be more careful when they make recommendations to the government commission, because the federal budget shouldn’t be responsible for negligence of private business. The struggle against paternalism shouldn’t stop even in such tragic conditions. Therefore, our colleagues from project organizations should look through the prospects. Scientists and project managers who deal with urban planning should help the Emergency Ministry. I know that the EM makes many such maps – on seismic zoning or climatic zoning. We should pose a question on resettlement or we should pose a question on establishing a system for fighting natural disasters because, unfortunately, warming and cataclysms will lead to the fact that the old format of construction is experiencing time pressure. I think the insurance companies have proposed the right initiative: to unite efforts on informative exchange with the state. Rosreestr is a state body that monitors the whole federal property. I don’t understand why a citizen should bring some certificate from the Interior Ministry confirming his right to a house if Rosreestr as a federal structure would provide the Interior Ministry with this certificate.

Korney Bizhdov, executive director of the National Agricultural Insurance Union

The most valuable thing in the country is its people, human lives. The sphere of our interests doesn’t involve aspects connected directly with citizens, they involve agricultural business. As a rule when we analyze emergency situations, issues connected with losses of agricultural business remain in the second wave of information interest. However, we have preliminary data. I want to draw your attention that the National Agricultural Insurance Union unites 27 insurance companies, including major leaders of our market: Rosgosstakh, Ingosstrakh, Alliance, Max, Alpha-Strakhovanie and others. After first pieces of information were collected, we carried out a poll among our members and tried to get the maximum information. By 12 July the situation was: agricultural insurance is provided with state support in Krasnodar Territory; and this is a significant moment, because agricultural insurance and the insurance of agricultural business can be implemented under different conditions. I mean households working in the system of state support. 9 companies are working, including major companies and regional companies. About 40 farms with a total area of 128.4 hectares have been insured by July 12. The insurance capital is more than 5 billion rubles. I'm speaking about companies which are members of the National Agricultural Insurance Union.

More precise information on the Krymsk region: at the moment, 4 companies out of 9 working in the Krasnodar Territory have confirmed that they have no insurance contracts functioning in the Krymsk region. One company stated it has contracts but no application for property losses has been sent. As a rule it takes 10-15 days to send an application. Of course the authorities and the local bodies are focused on helping population. We expect clearer information later.

Nikolai Galushin, deputy chairman of the executive council of the insurance group SOGAZ

In 20 years the Russian insurance market hasn’t turned into a big insurance market. We occupy less than 0.5% of the international insurance market. Actually, development of a market is defined by the level of penetration and gross volume of insurance premium per person. Here we have problems, first of all, in the sphere of individual insurance. Unfortunately, less than 10% of our citizens use the services of insurance companies – I mean insurance of their homesteads. I don’t speak about Compulsory Motor Third Party Liability.

Now the state has to play its social role again. Of course it is necessary to do so, but at the same time payments from regional and federal budgets do not encourage citizens to insure their property. An internal risk-management is absent. There is no need to assess my risks and try to protect my property by insurance, if I can be sure that in case of a disaster the state will help me. I think even this tragedy won’t motivate people, and the market of individual insurance won’t boom. The developments in Krymsk are tragic and significant for our insurance community. The volume of losses for the insurance community in the Krasnodar Territory will be the biggest in the history of Russian insurance. If only 5 billion are given for the suffered harvest and several billion are paid by SOGAZ only, I think in general it will be the biggest loss on the Russian insurance market. The loss didn't just touch one or two insurance companies, it touched on the majority of players in the market. We get used to consider Russia to be a territory where natural disasters are rare. See the map. Earthquakes happen in areas where no big cities and industries are situated. If the major part of the country experiences flooding, they happen only in spring and once in a blue moon.

Aexander Blaivas, vice-president of Rosgosstrakh

As for Krymsk, today the company has composed lists of insured facilities. Employees of the company who deal with settlement of losses check every house without request from a client because we understand that victims have to cope with many other problems.

As for the village of Nizhnebakansky, a field office was organized there; and it is working with citizens on the question of issue. As for figures, we gain new figures every day. By July 15 we knew about 365 buildings that had suffered and that were insured by Rosgosstrakh. We have already examined 290 buildings at the moment.

Boris Porfiryev, director of the Laboratory on Analysis and Prediction of Natural and Man-caused Risks of Economy under the Institute of Economic Forecasting, RAS

As for emergency situations of natural and man-caused character in the world in the last 50 years, Russia is not an exception. There is a clear tendency of growing losses from emergency situations. Material losses grow rapidly which is connected with extension of industries and built-up density, population growth, and the location of residential areas and industries in areas of risk. 2/3 of world production is situated in areas of risk. Russia is a country which is situated in high risk areas, but not as high as in developing countries. Nevertheless, 20% of our territories are earthquake-prone. For example, Tatarstan is one such area. 1/3 of our territory is at risk of flooding. Remembering forests, we understand that the country is at risk of fires. I don’t even mention underflooding, avalanches, mudslides and landslides. As for the statistics of deaths, in the world, first of all in developed countries, the number of victims is falling, but the number of those who suffer is growing for the same reasons.

What is important in the sphere of losses and comparing them with GDP? As for the comparison, the figure is about 0.2-0.25% of GDP, if we speak about direct material losses. The same figure concerns Russia. The problem is that GDP is a bad index in this case. It is not only senseless, but also vicious to count the influence of losses on GDP. GDP is an index that shows price for a year. Losses are not reflected in it.

That is why losses should be compared not with GDP, but with national revenues. If we speak about residential areas and households – with individual incomes. As for insurance, I totally support the insurance community. I think Russia’s problem is that we fail in this very important affair. The point is not only that due to the weak insurance market we cannot compensate losses adequately. The problem is that insurance funds are sources for long money, just like pension funds. And it is also investment in preventative facilities, not to mention other investments. That is why the issue is very important. In the world, the difference between general loss and insured loss is growing, it is 1:5 or 1:6, but in Russia the figures are irreconcilable.

Alexander Antononv, expert of urban planning of Designing Engineers Union

Engineers in Krymsk will hardly do anything after the flooding. At the moment the emergency services, insurance companies and healthcare services should be working there. But we have to think over whether we should reconstruct the town on a full scale. Not only natural disasters are dangerous, but also man-made disasters. In the village of Pugachyovo bombs explode twice a year. Never has the issue been raised that residential areas shouldn’t be situated near military facilities. And such facilities exist in the Moscow Region. Anyway residential areas should be relocated. Many remote villages were burnt by fires. Nobody discussed the economic reasons for their reconstruction. They were financed, and such villages still exist in the Moscow Region, as well as in the Nizhny Novgorod and Vladimir Regions. It is simple. It's much more difficult to plan cities and territories in general, for example, considering the possibilities of disasters. What can we do? Of course we should consider it. Unfortunately, the general plan of the Soviet Union 20 years ago and the document of territorial planning are two different things. I printed three sheets from the site of Krymsk: The Provision on Territorial Planning. It is doubtful that a serious document can look like that. Previously, general plans had two lines: one was called the “five-per cent flood line” and another was called the “one-per cent catastrophic flood line.” You will hardly find a general plan today that has such lines. Moreover, if they are marked in plans, they are probably copied from general plans which were written 20-25 years ago. A line is here, that is ok. Probably there is something there. In fact this line means nothing. It has no legal sense. It means nothing is forbidden.