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FLOODS DEVASTATE CZECH REPUBLIC

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PRAGUE, Czech Republic-Several days of heavy rains and severe floods in the Czech Republic have led to the country's worst natural catastrophe in modern times.

Insured losses are expected to be significant, though local insurers last week were unable to estimate the extent of their claims.

Almost the whole region of Moravia in the east of the Czech Republic was flooded, with the cities of Ostrava, Olomouc and Opava being some of the worst hit initially by the swelling of the Oder River. The floods also hit the Elbe River in eastern Bohemia and progressed east, before moving south along the valleys of the Opava and Morava Rivers, hitting the towns of Zlin and Brno. The floodwaters were expected to hit the confluence of the Morava and Danube Rivers between Vienna and Bratislava late last week.

By the end of last week, 15 people were officially reported dead or missing, thousands were left homeless, factories closed and crops were ruined in the country's breadbasket. Economic losses were estimated by government officials to be "billions of crowns."

"We don't know what our losses are. The details are in our Olomouc office, but that office is flooded," said a spokeswoman for Prague-based Ceska Pojistovna, the Czech Republic's largest insurer.

The rains and floods also hit large swaths of southern Poland, swelling the Oder and Neisse Rivers and inundating the cities of Opole, Katowice, Walbrzych and Raciborz, one of Poland's largest industrial regions. About 20 people were reported dead or missing, hundreds of homes were flooded or in some cases swept away by the floodwaters.

"The flooding is not as widespread as in the Czech Republic but there were reports that waters rose two or three meters within the space of 20 minutes," said Wlodzimierz Stebnicki, insurance department director at Warsaw-based Heros Banking Insurance & Reinsurance Co. S.A.

The emergency services have been so overwhelmed that homeless people had to find shelter wherever possible.

"The manager of our office in Opole has taken in seven homeless people in her flat," Mr. Stebnicki said.

The express train running from Vienna-via Prague and Ostrava-to Krakow was derailed on July 7 near Suchdol, north Moravia, because a bridge carrying the railroad was damaged by the flooding. Seven carriages were derailed, 64 people were injured, 10 severely, but there were no deaths.

Some of the Czech Republic's largest industries are in the flooded areas. Automobile manufacturer Skoda Auto, a division of Germany's Volkswagen A.G., had to close down production of its Felicia model for three days.

"Most of our suppliers are based in Moravia and they were seriously hit by the flooding," said a company spokesman. "Like many companies today we operate on a just-in-time basis and so we do not have many parts in."

On July 10, the plant was preparing to restart Felicia production on a step-by-step basis beginning with the paint shop, followed by welding, with full production resuming after a few days.

Skoda Auto purchases material damage, business interruption and liability insurance from local insurer Ceska Pojistovna, with excess coverage from Germany's Allianz Versicherung A.G.

"We are in discussions with our insurers. Our main problem is satisfying customer demand. Cars are a very seasonal business and the highest demand in the Czech Republic is during summer," he said.

Skoda produces about 1,200 Felicia models daily, meaning that about 3,600 have been lost during the shutdown. These models retail for 220,000 Czech crowns ($6,774) in the Czech Republic and 16,000 DM ($9,085) in Germany.

"Three days production loss is not such a great tragedy for us. We hope to make up the lost production through extra shift work and we are discussing this with our union," the spokesman said.

Flood insurance is a standard part of homeowners insurance policies, though flood coverage varies for commercial and industrial risks, said Jitka Bendova, a member of the international department at broker Aon Risk Services in Prague. "It depends on each company," Ms. Bendova said.

In the Czech Republic there is no state-sponsored catastrophe insurance pool, comparable to that in France and Spain, the spokeswoman said. But the Czech parliament last week authorized 900 million crowns ($27.7 million) in federal funds to help with immediate relief.

Prime Minister Vaclav Klaus said that the costs of the crisis will be met from a combination of funds from the state budget, extra taxes and private insurance.

Skoida's spokesman said that while there has been no similar flooding in the country in decades, it could have been much worse had not a countrywide system of flooding defenses and dams not been built during the earlier part of this century.

"If there had not been defenses along the Vltava River, then waters could have risen to the height of St. Wencelas' statue in Prague's Wencelas Square," he said.

There has not been time to estimate economic or insurance losses in Poland either, said Mr. Stebnicki. Various factories were unable to operate because they were flooded, but there were no estimates yet of losses.

Farmers must insure their buildings but crop insurance is voluntary.

The Polish government authorized 300 million zlotys ($91.1 million) from the state budget for disaster relief.