Majority of U.S. mid-market companies mistakenly uninsured against flood risks, reveals Chubb survey
A recent survey conducted by Chubb, a global property and casualty (P&C) company, has shed light on a concerning trend. It appears that flood risk is not a top priority for mid-market companies in the United States, with the majority of them mistakenly assuming their property insurance covers various types of flooding. The survey, which focused on mid-market companies valued between $10 million and $1 billion, found that nearly 85 percent of respondents believed their property insurance provided coverage for some, all, or most types of flooding.
The survey also revealed that over half of the insurance brokers surveyed (56 percent) indicated that companies do not purchase separate flood insurance because they mistakenly assume it is already included in their commercial property policy. Additionally, a staggering 84 percent of brokers stated that the majority of their clients do not purchase any form of flood insurance, highlighting a significant gap between perceived protection and the actual need for flood coverage.
Interestingly, the survey found regional differences in the gap between perceived and actual flood protection. The West exhibited the largest gap at 37 percent, followed by the South at 31 percent, the East at 28 percent, and the Midwest at 23 percent. This discrepancy is concerning as it suggests a lack of awareness around the severity and frequency of floods, even in traditionally low-risk areas.
The misconceptions and coverage gaps uncovered in the survey demonstrate a broader misunderstanding when it comes to preventing and mitigating flood risk. According to the global P&C insurer, there is an overall lack of consensus among businesses regarding the multiple causes of floods and flood exposure. The leading perceptions among the surveyed brokers were overflowing of a body of water (67 percent), inundation/heavy rainfall (56 percent), and surge/tidal waves (43 percent).
It is crucial for mid-market businesses to prioritize building resilience against flood-related risks through effective flood mitigation tactics. The survey findings underline the increasing prevalence and severity of extreme weather events, making flood insurance coverage more essential than ever before. Louis Hobson, the senior vice president of North America Flood Insurance at Chubb North America, emphasized the need for insurance carriers and brokers to educate the marketplace and ensure organizations understand the risks associated with floods and the available protection.
The survey also highlighted that a significant portion of businesses remains unaware that flooding is the most common and costly natural disaster, with only a small minority (less than 30 percent) recognizing this fact. Alarmingly, almost half of the brokers surveyed (45 percent) stated that their clients do not even inquire about flood insurance coverage.
In conclusion, the Chubb survey has exposed a significant gap between perception and reality when it comes to flood protection among U.S. mid-market companies. The findings underscore the urgent need for education regarding the severity and frequency of floods, even in regions traditionally considered low-risk. Businesses should prioritize obtaining proper flood insurance coverage and focus on implementing flood mitigation strategies to enhance property and operations resilience. By bridging the knowledge gap and increasing awareness, organizations can better protect themselves against the financial and operational consequences of flooding.