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The devastating floods that hit Central Europe in June are likely to cost insurers up to $4.5bn (€3.5bn), one of the region's leading insurers said on July 8. The estimate is lower than some had feared, with much of the credit for that handed to the defences built in the wake of the last disaster in 2002.

Insurance giant Swiss Re said in a statement that the total losses for the insurance industry will be between $3.5-$4.5bn. The company put its own exposure to the flooding - which left at least 20 people dead as torrential rains in early June saw rivers burst their banks in Austria, the Czech Republic, Germany, Hungary, Poland and Slovakia - at about $300m.

The total estimated by Swiss Re is far below an estimate last month from Fitch, which cautioned the tab could prove more costly than the "worst-in-a-century" floods in 2002. The ratings agency forecast €12bn in damage in Germany alone, of which up to €3bn would be covered by insurance policies.

The Czech Insurance Association said on June 6 that it may have to pay out up to CZK7.5bn (€290m). Moody's Investors Service, the rating agency, said that although the losses are credit negative for those with exposure, "current information suggests that total claims to insurers will be less than the €3.5bn" that the industry incurred following the 2002 disaster.

According to Erste Bank, a total of €3.3bn was spent across Central and Eastern Europe in the intervening years, and that "helped [the countries] reduce the losses significantly," the bank's analysts suggest. They estimated the total economic damage from the latest episode at a fraction of the €6bn or so incurred in 2002.

Spared

Swiss Re credited the local flood prevention measures installed following 2002 for sparing many regions from major losses.

The floods eleven years ago devastated much of the region, as water invaded major cities to bring them to a halt for days and destroy huge swathes of property. That prompted states across the region to announce expensive programmes to improve their flood defences - a plan that had many wondering just how much of that investment would be siphoned off over the years of construction. Eleven years later, the waters returned to test them.

Those expecting to see high tech water management at work were disappointed for the most part, with cynics giving a knowing nod as Czech fire crews and the army spent days piecing together temporary metal fences and building walls of sandbags along the stretch of the Vltava through Prague. However, the defences - which costs around €500m nationwide - coped admirably. The city saw little damage, although transport was heavily disrupted, but other urban centers - such as Usti and Labem in the north - suffered significant invasion by the water.

The Hungarian capital also thanked its defences as they protected Budapest from major havoc, despite seeing the Danube crest at a record high. In Slovakia, Prime Minister Robert Fico said that thanks to the Bratislava's new flood defences, the authorities "are prepared to fight the water on the level at which it was in 2002."

The government said in the immediate wake of the latest flood that it plans to apply for €400m in EU funds for further anti-flood protection measures to be completed by 2020, adding to the €600m anti-flood measures installed in 2005-2010. Erste suggests the positive experience with the flood protection systems across the region will prompt governments to invest more in this area in the coming years.