Flood: Understanding the Risk, Navigating Insurance Options
With three-quarters of the Earth covered in water, it’s no surprise that flood is one of the world’s most destructive — and most common — natural disasters.
In fact, all 50 US states have had presidentially declared flood disasters, and the US Geological Survey (USGS) called floods the number one natural disaster in terms of lives lost and property damage.
Data on major flooding events since 1900 show that significant floods have occurred in every state.
Areas of significant flooding frequency
FEMA, which maintains flood risk maps for more than 20,000 communities as part of its role in overseeing the National Flood Insurance Program (NFIP), estimates that 98% of US counties have experienced a flood event.
Clearly, individuals and businesses can be exposed to flooding virtually anywhere, at any time of year. Yet many people underestimate their vulnerability to flooding. That mindset helps make flood one of the world’s most underinsured events, for individuals as well as businesses.
Consider the insured natural catastrophe events that occurred in the US in 2016, which, as is typically the case, shows floods as one of that year’s costliest and most frequent events.
U.S. Natural Catastrophe Losses 2016
Yet many people underestimate their vulnerability to flooding. That mindset helps make flood one of the world’s most underinsured events, for individuals as well as businesses.
The lack of flood insurance has ramifications beyond those of the individual business or homeowner. Uninsured floods hurt economic growth, prolong the recovery process for affected communities, and place additional burdens on taxpayers, with uninsured victims turning to government sources for assistance.
The reasons that people and businesses go uninsured for flood vary. Some simply don’t consider themselves to be at risk or in danger or do not understand their risk. Some say they can’t afford coverage. Some simply don’t know their options, aligned to their risk.
About the Report
This paper seeks to raise awareness of the solutions available in the flood insurance market, and how people can better understand their risk. It is a collaborative effort by Marsh and McLennan Companies subsidiaries Marsh, Marsh Private Client Services, Marsh & McLennan Agency, and Torrent Technologies.