US mid-market companies are largely unaware of and unprepared for the risks their businesses face from flooding, according to a new report from Chubb.
In order to measure businesses’ perceptions of flood risk, Chubb surveyed insurance brokers, who the company said were well positioned to understand their clients’ awareness of flood risks and the available insurance options.
According to the report, 85% of mid-market companies mistakenly believe their property insurance covers some, most, or all kinds of flooding. The report also found that only a small minority of businesses know that flooding is the most common – and the most 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,” Chubb said.
Floods in the US have cost taxpayers more than $850 billion since 2000 – two-thirds of the cost of all natural disasters, Chubb said.
“Flood risk is far more pervasive with the increasing frequency and severity of extreme weather events,” said Louis Hobson, senior vice president of 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 protections available.”
Key findings of the report include:
The survey findings demonstrated that it is urgent for the insurance industry to clarify flood coverage details, Chubb said. Businesses should also focus on building resilience into their properties to help mitigate the impact of flooding.
Hobson recommended that businesses take the following actions:
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