Flood Insurance — Chubb Survey Finds Dangerous Misconceptions

Chubb’s Flood Risk and Resilience report offers some serious concerns for wealthy homeowners, commercial businesses and for agents and brokers. It points to a worrisome misconception about the risk of flood and flood damage mitigation.

The good news is 84% of homeowners and 72% of commercial businesses believe the risk of flooding is greater now than it was five years ago. However, most don’t think the risk applies to them.

Citing “low risk” as the reason, 62% of homeowners say they haven’t purchased flood insurance for their primary residence. Underinsurance, higher out-of-pocket expenses and availability follow as big concerns to those same homeowners.

Chubb senior vice president fir North America flood insurance, Louis Hobson said premium costs are the reason 36% of commercial businesses have not purchased flood insurance. Another 4% say the limited availability of information on flood policies is a big challenge.

When it comes to homeowners, 20% say they haven’t picked up flood insurance because of a belief their property is in a low-risk area. The report attributes that to bad communication about the insurance itself. The reason for 70% of homeowners and 52% of commercial businesses say government issued flood reports led them to that belief.

"Clear and direct communication is the most impactful way to counter the common misconception among policyholders and potential clients that natural catastrophe-related flood damage is covered under a standard property policy," Hobson said. "Agents and brokers should be using every channel available — email campaigns, social media platforms, policyholder portals and one-on-one consultations — to drive home this message."

Sadly, personal lines agents and brokers report that just 47% of their clients use insurance company flood risk models to assess their risk.

The good news is 48% of homeowners living within three-miles of a body of water said they are worried about possible flooding. For businesses the three-mile body of water scenario worries just 25% of them.

Over half of the people — 52% —  with the right amount of coverage say the advice they received from trusted experts, like an independent insurance agent of the PIA, got them to purchase the right amount of coverage.

As you can easily guess, worries decrease significantly the farther away a homeowner or business is from water.

The report also focused on high income clients with a lot of net worth and why they are reluctant to purchase flood insurance.

• 42% don’t think flood insurance is necessary
• 39% think the premiums are too costly
• 36% believe flooding is an isolated event
• 35% have coverage misconceptions
• 24% can’t figure out the complex nature of flood insurance policies

Chubb said 80% of the high-net-worth people it surveyed said their primary residence is insured against flooding. Yet, the company could only find 5% actually having a flood insurance policy. Chubb thinks the discrepancy in the numbers is because most of the 80% believe their homeowners policy protects them against flooding.

Source link: Carrier Management — https://bit.ly/3Oyy2gE

Source link: PropertyCasualty360.com — https://bit.ly/4a8Ph0y