White Paper

Most Property Owners Underestimate Their Flood Risk. How Innovative Insurance Solutions Are Coming to the Rescue

Most parts of the U.S. are vulnerable to flood risk. Why aren't homeowners protecting their properties?

White Paper Summary

Floods are a truly ruinous type of natural disaster.

Homeowners might flee at the height of a hurricane or other storm and return to find their home in disarray, the water destroying many of their possessions and damaging their homes.

Yet despite the devastation floods can cause, only 22% of homeowners surveyed by Munich Re and the Insurance Information Institute (Triple-I) believe they are at-risk of being impacted by flooding. Only 78% who believed they were at risk purchased insurance.

“Ninety percent of all natural disasters include some type of flooding,” Tim Brockett, EVP and head of specialty for Munich Re US “It is an underestimation of risk.”

A mix of inaccurate flood maps (in 2019 only 42% of FEMA’s maps correctly predicted flood risk) and wishful thinking might be to blame for why property owners are so terrible at estimating their vulnerability to flooding. If a mortgage lender doesn’t require flood insurance, it’s easier and cheaper to go without.

As more and more homes face flooding insurers will play a critical role in educating property owners about the risks of damage and their insurance options. Some may create products suited to this increase in exposures and invest in technologies that help accurately model risk and prevent damages.

To learn more about Munich Re, please visit their website.

Munich Re, and its family of companies, has been a leader in risk for more than 100 years. We are spearheading innovation to deliver competitive advantages for our clients every day and disrupting on our own terms to reimagine the world of risk itself. Munich Re Specialty is a description for the insurance business operations of affiliated companies in the Munich Re Group that share a common directive to offer and deliver specialty property and casualty insurance products and services.

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