Flood losses are increasing at an alarming rate while the insurability of floods provides unique challenges for the industry, according Swiss Re's latest report, "Flood–an underestimated risk: Inspect, inform, insure". Coinciding with the release of the publication is the release of a flood app, which packages Swiss Re's flood expertise into an entertaining and interactive medium for iPads.
No other natural catastrophe impacts as many people as flooding with an estimated 500 million people affected every year. Insured flood losses are also increasing significantly; 1970's annual claims were between $1–2bn, whereas insured flood losses amounted to $15bn in 2011. Recent flood events in Thailand, Australia and the Philippines have shown that floods are now rivalling earthquakes and hurricanes in terms of economic losses.
However, awareness of flood risks and their impact is still relatively low. Swiss Re's publication "Flood–an underestimated risk" aims to close this knowledge gap.
Matthias Weber, Swiss Re group cuo, says "With this publication we want to raise greater awareness of floods, their risks and the role of insurance in addressing them. We show what it takes to tackle the challenges in flood insurance and what successful solutions might look like for homeowners and companies."
Population growth, demographic change, a higher concentration of assets in exposed areas, greater vulnerability of insured objects and climate change are all contributing to the increasing costs of flood damage. The rising costs of floods are creating challenges for the insurance industry and the economic viability of flood insurance is currently an issue under scrutiny.
Jens Mehlhorn, head of Flood at Swiss Re and the report's key author, says "2011's $12bn insured losses in Thailand really highlighted the potential for flood to cause extreme losses. The insured losses corresponded to 1800% of the country's total annual property premium–and this emphasises the difficulties the industry faces in creating an economically viable approach to flood insurance."
At the centre of the flood report is an investigation into ways of building adequate insurance populations to share the risk of flooding and how insurers can play a role in advising on risk-minimisation strategies such as flood-walls and urban planning. The report also investigates national programmes which are currently meeting the challenge of providing flood coverage.
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