Robert Muir Wood
“Education is critical to solving under-insurance in America’s disaster zones – people should have a keen understanding about their risks and be incentivized to take action and responsibility.
Currently, flood insurance is only mandated for residences located in ‘flood zones’; however, no one checks if insurance is still in place beyond the first year after the home purchase.
As we saw in Houston with Harvey and in Miami with Irma, flood continues to be a problem for US communities. If buyers are educated about their risk and insurance is mandated for the lifetime of a home loan, we could close that gap.”
“An alarming trend in recent natural disaster data is the difference between the estimated costs of these events versus the estimated insured losses and the ever-increasing gap between them. Cost of insurance, lack of understanding of the true potential for loss and the misconception that the federal government may bail out a business in the event of a disaster are some factors leading to underinsurance.
Education and technology will help clients better understand their CAT exposures. Data analytics platforms, such as EigenPrism, help clients visualize and analyze their potential for catastrophic loss. Showing a client in real time the impact an event could have on their business is powerful.”
“The single greatest hurdle to overcome is perception – most people vastly underestimate their exposure to catastrophic loss.
For example, Temblor.net estimates the probability of major earthquake damage to a San Francisco home over 30 years at 11%. The probability of a car being totaled over that period is less than 3%, and the chance of the home burning down is less than 2%. People readily insure their cars and homes against these hazards, although the chance of those losses is much lower than the earthquake insurance they don’t purchase. Flood insurance is similar – unless it is required, few homeowners buy it, even in flood-prone areas.”