Report highlights lack of awareness on flood
risks and available insurance protection
WHITEHOUSE STATION, N.J., Nov. 14,
2023 /PRNewswire/ -- Chubb, the world's largest
publicly traded property and casualty insurance company, today
unveiled findings from a new survey that finds U.S. mid-market
companies (a majority between $10
million and $1 billion) are
significantly unaware of and unprepared for the risks their
businesses face from flooding.
Some 85% of companies mistakenly believe their property
insurance covers some, all, or most types of flooding. Further,
only a small minority of businesses recognize that flooding is the
most common and costly natural disaster. Taken together, the survey
results show a severe underestimation of the gravity of commercial
flood risk and underscore the urgent need for education around the
severity and frequency of floods, even in traditionally low-risk
areas.
In the U.S. alone, floods have cost taxpayers over $850 billion since 2000, accounting for
two-thirds of the cost of all natural disasters. To gauge
perceptions of businesses related to this risk, Chubb commissioned
a survey of insurance brokers, who play a critical role in advising
businesses on securing insurance coverage to help protect them from
risks, including floods and other natural catastrophes. Brokers,
are well positioned to understand their clients' awareness of flood
exposures and understanding of available insurance protections, as
well as their familiarity with flood insurance and risk mitigation
measures.
"Flood risk is far more pervasive with the increasing frequency
and severity of extreme weather events," said Louis Hobson, Senior Vice President, North
America Flood Insurance at Chubb North America. "This report shows
that far too many companies are unknowingly uninsured against flood
risks. It is incumbent on insurance carriers and brokers to educate
the marketplace and ensure organizations understand the risks of
flood and the protection available."
Key highlights:
- Coverage Misconceptions: According to the report, 85% of
companies mistakenly believe their property insurance covers some,
all, or most types of flooding. Further, more than half of brokers
(56%) said organizations they support do not purchase flood
insurance because they assume it is already included in their
commercial property policy. A large majority of brokers – 84% –
report that most of their client base does not purchase any flood
insurance. These findings suggest a major disconnect in perceived
and actual flood protection.
- Top Regional Underinsurance Rates: The survey revealed
the West as the region with the biggest gap between the purchase
and perceived need (37%), followed by the South (31%), East (28%)
and Midwest (23%).
- Widespread Lack of Understanding: These
misconceptions and coverage gaps reveal a broader misunderstanding
on preventing and mitigating flood risk. More than two thirds (69%)
of brokers believe a small minority of businesses know that
flooding is the most common and costly natural disaster. Nearly
half of brokers (45%) say their clients do not even request a quote
for flood insurance coverage.
- Inconsistent Definitions. There is also a lack of
business consensus around defining the multiple causes of floods
and flood exposure, with the leading perceptions focused on
overflowing of a body of water (67%), inundation/heavy rainfall
(56%) and surge/tidal waves (43%), among others.
These findings create a sense of urgency within the insurance
industry to clarify coverage details, so that commercial property
owners are not surprised when they discover their flood losses are
not covered by existing policies. Businesses may want to focus on
building resilience into their properties and operations to ensure
they are adequately prepared for the long term.
Hobson recommends businesses consider taking the following
actions:
- Assess the risk factors that may impact their operations.
- Seek flood insurance quotes to provide clarity on what is
covered by commercial property insurers.
- Build resilience by using an insurance carrier's tools and
technology to mitigate flood exposure.
- Adapt to the changing reality through regular partnerships with
insurers and brokers.
- Utilizing loss prevention services including Internet of Things
(IoT) devices that can help predict and prevent property
damage. Leaks and changes in temperature, humidity, or water
pressure can cause damage to critical infrastructure and valuable
assets.
Chubb is committed to empowering organizations to make more
informed and sustainable decisions as they insure their businesses
and provide services to help evaluate and create resilience.
To access the full Chubb Commercial Insurance Flood Risk Survey
report, please visit
https://www.chubb.com/us-en/businesses/campaign/commercial-flood-insurance-report.html.
About Chubb Commercial Insurance Flood Risk Survey
Chubb Commercial Insurance Flood Risk Survey assesses how
companies and industries are preparing themselves from the rise in
extreme weather events through the lens of insurance brokers. The
report surveyed 332 commercial brokers, spanning key regions across
the United States including
the Pacific South, Pacific Northwest, Southwest, Midwest,
Northeast, NY Region, Mid-Atlantic Region, and the Southeast. Half
of the companies cited by brokers reported revenues under
$50 million, 29% reported revenues
between $50 million and $500 million, and 23% reported revenues exceeding
$500 million. The survey cites
companies in industries most sensitive to suffer financial losses
from catastrophic weather events such as aerospace, agriculture,
telecommunications, clean tech, construction, cultural and
education organizations, energy, entertainment, and government
contractors. The market research was commissioned and
conceived by Chubb and includes broker survey results from
iResearch Services and Chubb internal survey data. It was
fielded between May 17, 2023 and
June 6, 2023, with a margin of error
of +/- 4%.
About Chubb:
Chubb is the world's largest publicly traded property and
casualty insurance company. With operations in 54 countries and
territories, Chubb provides commercial and personal property and
casualty insurance, personal accident and supplemental health
insurance, reinsurance and life insurance to a diverse group of
clients. As an underwriting company, we assess, assume and manage
risk with insight and discipline. We service and pay our claims
fairly and promptly. The company is also defined by its extensive
product and service offerings, broad distribution capabilities,
exceptional financial strength and local operations globally.
Parent company Chubb Limited is listed on the New York Stock
Exchange (NYSE: CB) and is a component of the S&P 500 index.
Chubb maintains executive offices in Zurich, New
York, London, Paris and other locations, and employs
approximately 40,000 people worldwide. Additional information can
be found at: www.chubb.com.
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SOURCE Chubb