Extreme weather phenomena, such as the heatwaves and drought of summer 2026, are developing into an increasing burden for the German economy. An analysis by credit insurer Allianz Trade forecasts that losses in Germany could total approximately US$131 billion between 2026 and 2030, should severe heatwaves recur. High temperatures reduce productivity while simultaneously leading to rising energy costs. In addition to heat, events such as floods, storms, hail, and forest fires also significantly impact business operations.
Sejdin Sejdini, Managing Director of ProFina Deutschland GmbH, points out that extreme weather can affect businesses in diverse ways. This ranges from a flooded cellar after heavy rain to storm damage to the business premises, or industrial estates being closed due to forest fire risk, or production facilities that can no longer operate reliably during sustained heat. An event does not necessarily have to directly damage one's own location; power outages, blocked transport routes, or failures at important suppliers can also severely disrupt business operations.
Beyond obvious material damage to production facilities, inventory, roofs, or facades, machinery can also overheat, cold chains can be interrupted, or workflows disturbed. Additionally, potential power and infrastructure failures can negatively affect IT systems, production, or logistics. These events can trigger a chain reaction: the failure of a facility leads to a production stoppage, which means delivery dates cannot be met and revenues are lost, while fixed costs such as rents, salaries, or financing costs continue.
Mr. Sejdini adds that consequential damages often only occur with a delay. Customers could switch to competitors, orders could be lost, or contractual obligations not met. Replacing specialised machinery or comprehensively renovating business premises can take weeks or months until the original operational capacity is restored. Therefore, preparedness should not exclusively encompass the protection of buildings and inventory.
Insurance as Part of Preparedness
Various insurance policies are available to provide cover against specific damage events caused by extreme weather, the details of which are crucial.
- —Business building insurance covers damage to the insured business premises caused by storm, hail, or fire. Additional cover for elemental or other natural hazards is usually required for risks such as floods.
- —Contents insurance protects business equipment, goods, and stocks against defined hazards, whereby the exact scope of included natural hazards must be checked.
- —Machinery insurance can be important for companies with high-value technical installations. Depending on the cause and contract terms, it covers damage due to heat, overvoltage, or other impacts.
- —Business interruption or loss of profit insurance can mitigate the financial consequences of a business standstill by compensating for ongoing costs and lost operating profit. It is crucial here which causes of damage are insured as triggers.
- —In the event that not one's own business, but a significant supplier or customer is affected by an insured event, resulting business interruptions can also be covered, depending on the insurance concept (contingent business interruption).
Insurance cover forms an important part of preparedness but does not replace comprehensive operational risk management, as the insurance expert explains. Companies should analyse which natural and weather hazards their locations are exposed to and what consequences a failure of central facilities or processes would have. Preventive measures can include flood protection, adapted storage of sensitive goods, adequate cooling and shading during heat, regular maintenance of technical systems, data backups, and emergency and recovery plans. These measures help to equip businesses against extreme weather events.
