Lloyd’s of London calls for new flood pricing method

Study suggests pricing could be more effective and potentially offer lower premiums

Lloyd’s of London calls for new flood pricing method

Insurance News

By Terry Gangcuangco

Lloyd’s of London believes insurers should consider natural coastal habitats when pricing flood risk, as a new study revealed that mangroves, coral reefs, and salt marshes are more effective against coastal storms when compared to seawalls.  

“Investment to conserve natural habitats also makes sense for insurers, a report written for Lloyd’s revealed, as it is around 30 times cheaper than building seawalls,” reported Reuters.

It said insurers have paid out more than S$276 billion in claims for damages due to coastal floods in the past decade. However, according to the report, providers could reduce the amount they pay in claims and offer lower premiums if they considered the impact of natural infrastructure.

Trevor Maynard, head of innovation at Lloyd's, was quoted as saying, “If you are in a more resilient city, compared to a less resilient one, then those risk levels should be taken into account in pricing.”

The study was conducted by the Center for the Blue Economy, the University of California, Santa Cruz, and The Nature Conservancy.

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Property premiums in India could be due for a hike

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