How to rethink flood risk and help society become more resilient
Flash and river floods– increasingly taking many lives and putting economies under severe stress. We can help ensure the best possible outcome for your clients.
The risk from flooding keeps on rising
The insurance industry has come a long way since the first sigma in 1968. But the threat from flooding remains formidable. Floods continue to affect more people worldwide than any other type of natural disaster. An average half a billion people are impacted by river flooding, storm surge or flash floods every year. With USD 50 billion in annual global losses, the economic damage caused by floods is staggering. These costs are set to rise even further, as more people and businesses move to densely populated urban areas. Some of the world’s major economic centres face the greatest risk of flooding, particularly in the US, China and India. In Europe, the metropolitan regions of Amsterdam-Rotterdam, Paris, London, Milan and Hamburg are among those most exposed to coastal or river flood risk.
The time to act is now, the way to do it is together
Much is already at stake. Climate change and sea level rise could make things even worse. An estimated 650 million people will be living below sea level or in areas affected by regular flooding by the end of this century. If we do not take action to prevent damage from the increasingly common and heavy floods and storms we expect to see in the future, the protection gap is likely to widen even further.
To tackle this challenge, the insurance industry should work more closely together with governments, the financial sector, local planners and civil protection experts. Because only together can we address the specific needs of various sections of the economy and society and deliver bespoke, need-specific, and affordable insurance products. One such collaboration is Flood Re, a consortium comprising the UK government and several insurers and reinsurers. Flood Re provides affordable cover for floods to over 350 000 UK homeowners and is a good example of how the public and private sectors can effectively join forces to close the flood protection gap.
With floods affecting populations practically everywhere, there are plenty of opportunities – and great demand – for similar solutions in many more markets around the world. Clearly, insurance cannot prevent floods. But it can help residents and businesses recover from the havoc they wreak. We have the knowledge, the data and the solutions to offer flood protection to many more communities. What is needed now is the collective will to do so. Together we can make it happen.