This year, Hurricanes Helene and Milton caused unprecedented property damage in the southeastern United States.
Some of the affected areas, like Asheville, North Carolina, hadn’t experienced significant flood damage in more than 100 years. Since property insurance policies typically don’t include coverage for flooding, business owners and residents are left on the hook for tens of thousands of dollars in property damage.
The gap between property and flood insurance will only grow more pernicious as regions across the U.S. experience an increase in hurricanes, severe convective storms, atmospheric rivers and torrential rains. Flood-prone areas of the country are expected to grow by 45% by 2100, according to the FEMA Climate Change Report published by AECOM. This will leave an even greater share of property owners vulnerable, especially in areas like Asheville that historically haven’t needed robust flood coverage.
The current property and casualty marketplace offers few options for residents and business owners in these regions, putting retail agents in a difficult position as they attempt to help clients find appropriate coverage. As flood risks escalate, insurers will need to adopt innovative solutions that provide comprehensive and accessible coverage while managing their own risk exposure.
Closing the flood insurance gap will require a multifaceted approach. There’s no single solution that will work for all insurers and insureds. But a combination of data-backed insights and innovative policy structures can help more property owners get the security they need as floods become more common across the U.S. Together, the following solutions can go a long way to bridging the gap.
The slideshow above illustrates three key ingredients for closing the flood insurance gap in high-risk areas.
Innovative insurance solutions
As floods threaten a growing number of property owners, insurers will need to leverage leading-edge technologies and innovative policy structures to meet demand for flood insurance coverage. Fortunately, those tools are at their disposal. Thanks to capabilities like advanced CAT modeling and access to real-time weather data, as well as innovations like parametric insurance, it’s now possible to offer flexible policies in more regions without assuming unsustainable risk.
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