(Bloomberg) -- The floods that devastated the Spanish region of Valencia at the end of last month are expected to trigger total insurance losses in excess of €3.5 billion ($3.8 billion), Moody’s estimates.
The projection is based on the first 72,000 insurance claims, with more expected in the coming weeks, the rating agency said in a report dated Thursday.
“While the full economic impact for the regions affected is not yet clear, we expect significant losses for local economies, affecting both public and private sectors,” Moody’s analysts including Marisol Blazquez said.
Spain’s worst natural disaster in recent memory left more than 200 people dead, while others remain missing, following inundation and mudslides that hit at least 75 cities and towns. Streets are still covered with mud, while tens of thousands of cars were affected and many people have lost their homes. Roads and train lines were also damaged.
The Spanish government announced its first financial recovery package, which is valued at up to €10.6 billion and includes direct aid and state-backed loan guarantees for households, self-employed workers and companies. Prime Minister Pedro Sanchez said that more aid will be announced in the near future.
Around 4,500 businesses in the Valencia area have been directly affected, half of which face potential closure, while at least 53,000 hectares of agricultural land have been damaged, with crop losses expected to total around €150 million, according to Moody’s.
The insurance claims are expected to be met by a public fund, the insurance compensation consortium, set up in Spain last century to offer coverage against incidents of an extraordinary nature that are usually not included in coverage by private insurance.
“Private companies like Mapfre, Mutua Madrilena, Allianz, Axa, GCO and Generali will pay only part. Spain’s largest-ever insured loss will largely be met by its Insurance Compensation Consortium,” Bloomberg Intelligence analysts Charles Graham and Kevin Ryan wrote in a note earlier this week.
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