The losses insurers face from the worst flooding in central Europe since 2002 may be lower than those resulting from the deluge 11 years ago even as the toll on local economies looms larger.

Insured losses may reach 2 billion euros ($2.65 billion) to 3 billion euros, Michael Klien, an analyst for Nomura in London, wrote in a note to clients today. That compares with 3.4 billion euros from the floods that submerged towns, villages and farmlands from northern Germany to Hungary in 2002.

The deluge, triggered by unseasonal heavy rainfall, has left at least 12 people dead as swollen rivers, including the Vltava, Danube and Elbe, and their tributaries, burst dams and breached banks. Emergency crews and volunteers are still racing to fill sandbags and build temporary dikes as the Elbe and Danube crest northward and eastward, threatening towns the floods won’t reach until the weekend or early next week. More rainfall is forecast for the coming days.

“While the severe flooding that has hit central Europe is still ongoing, it seems increasingly likely that losses for insurers will be lower than for the severe floods of 2002,” Michael Klien, a London-based analyst with Nomura, wrote in a note to investors. Anecdotal evidence suggests various factors including better flood protection will lower the losses, he said.

Shares Gain

“The yearly budgets for natural catastrophe at most insurers should more than suffice to cover the flood costs,” he said.

Munich Re and Swiss Re, the world’s biggest reinsurers, said it’s still too early to evaluate the current disaster and related losses. Munich Re shares rose 0.8 percent to 138.75 euros as of 1:25 p.m., while Swiss Re was up 1.7 percent. Allianz SE, Europe’s largest insurer, gained 0.3 percent to 113.50 euros.

The Czech Insurers Association yesterday estimated the country’s flood damage at 7.5 billion koruna ($383 million), spokeswoman Jolana Ackermannova said by phone, after the Czech government approved 5.3 billion koruna for immediate flood relief. In 2002, the insured damages totaled 34.7 billion koruna, while total damages came to 73 billion koruna, the association said.

“Many people are making parallels to 2002,” said Clement Booth, a board member at Allianz, in a statement on the Munich- based company’s website. “However, we are not seeing the same extent of damages yet.”

Economic Toll

Booth attributed part of the reason for the potentially lower losses to protective work carried out after the last catastrophe such as anti-flood barriers erected in Prague to shield the Czech capital’s historic center.

Still, the final cost of the floods is likely to be considerably higher than the insured loss as only limited flood coverage is available in many of the countries affected.

“The macroeconomic loss will be much bigger than the insured loss,” Munich Re Chief Executive Officer Nikolaus von Bomhard said on June 5.

The economic fallout for Germany alone may exceed the 11 billion-euro damage caused by the 2002 floods, Eric Schweitzer, the president of the German chamber of trade and industry DIHK, said in an interview with Rheinische Post today.

German farmers face damages as high as 250 million euros as at least 150,000 hectares of farmland lie under water, the DBV farmers’ association said in a statement today. Additional damage of 50 million euros to 80 million euros to buildings and losses to livestock put the total cost at higher than 300 million euros, it said.

Additional Premium

“Insured losses can be assessed, at the earliest, at the end of next week,” said Kathrin Jarosch, a spokeswoman for the German Insurance Association in Berlin.

The 2002 European floods caused 18 billion euros of economic losses, half of which were attributed to Germany, according to PricewaterhouseCoopers LLP.

Coverage in Germany depends on the type of insurance contract, and for home insurance is usually only available on payment of an additional premium, according to a report by the European Commission.

“Flood insurance will play a much smaller role in covering the costs than we might see in the U.K.,” said Mohammad Khan, a partner at PwC in London who specializes in catastrophes. “In our most recent severe floods in 2007, around 75 percent of all losses were borne by the U.K. insurance industry.”

The European Environment Agency estimates that river flooding costs European Union member states 6.4 billion euros annually in economic damage and expects this to rise to as much as 21.5 billion euros by 2100, at constant 2006 prices.

Editors: Angela Cullen, Frank Connelly