Property and casualty insurer Chubb has disclosed findings from a recent survey, indicating that U.S. mid-market companies, with a majority falling within the $10 million to $1 billion range, are significantly unaware and unprepared for the risks posed by flooding.
The survey underscores a concerning trend, with a staggering 85% of companies mistakenly believing that their property insurance provides coverage for some, all, or most types of flooding.
This misconception is further exacerbated by the fact that only a small minority of businesses recognise flooding as the most common and costly natural disaster.
These results expose a severe underestimation of the gravity of commercial flood risk, highlighting an urgent need for enhanced education on the severity and frequency of floods, even in traditionally low-risk areas.
Floods in the U.S. alone have incurred costs exceeding $850 billion since 2000, constituting two-thirds of the expenses associated with all natural disasters.
Chubb’s commissioned survey of insurance brokers, pivotal in advising businesses on risk management, reveals a critical gap in understanding among businesses. Brokers report that a significant number of their clients do not purchase flood insurance, assuming it is already covered in their commercial property policy.
A striking 84% of brokers note that most of their client base does not invest in any flood insurance, indicating a substantial disparity between perceived and actual flood protection.
The survey also unveils regional disparities, with the South displaying the largest gap between perceived need and actual purchase of flood insurance (31%), followed by the East (28%), the West (27%) and Midwest (23%).
Louis Hobson, Senior Vice President, North America Flood Insurance at Chubb North America, emphasises the need for immediate action within the insurance industry to rectify these misconceptions.
Hobson recommends that businesses assess risk factors impacting their operations, seek flood insurance quotes for clarity on coverage, build resilience using tools and technology, and establish regular partnerships with insurers and brokers.
