Angela Lee
Senior Vice President, National Claims Director
The increasing number of property flood damage claims and the effects of climate change point to the need for proactive risk management and suitable insurance coverage. As weather patterns shift and storms become more intense, the risk of flooding rises. It’s important not to wait too long to take action. By understanding what’s causing the increase in flood claims and taking steps to address it, individuals and organizations can better protect their properties from flood damage.
Increased claims frequency
There’s been a steady rise in property flood damage claims in recent years. This can be linked to factors like climate change, changing weather patterns, and more development in flood-prone areas. These factors have resulted in more claims for flood-related damages, such as water intrusion, structural issues, and business interruptions. This trend highlights why it’s helpful to manage risks early and have the right insurance coverage to lessen the impact of flooding.
Impact of climate change
Climate change may influence flood risk and insurance claims. Rising sea levels, changing rainfall patterns, and stronger storms can lead to more frequent and severe flooding. As the climate warms, weather patterns shift, and extreme weather events happen more often. These changes can result in more heavy rain and a greater chance of flooding. Rising global temperatures also raise the risk of coastal flooding and storm surges.
Rising claim costs
The rising costs of commercial property flood damage claims are a concern for insurers and property owners. Flood damage can be extensive, resulting in high repair and restoration costs, along with expense from business interruptions. Floodwaters can cause serious damage to commercial buildings, including foundations, walls, floors, and electrical systems. The force of the water can weaken structures, sometimes requiring major repairs or even complete rebuilds.
Technology-driven claims handling
Insurers are using technology to make claims handling simpler and more efficient, which can help both insurers and policyholders. This includes drones for aerial assessments, satellite images for damage checks, and online platforms for reporting and communication. These tools can speed up claims processing and improve accuracy. Digital platforms also support real-time communication and can make claims handling run more smoothly.
Increased focus on resilience and risk reduction
Insurers and property owners are paying more attention to resilience and risk reduction measures to help reduce flood damage. This includes using flood-resistant building designs, raising critical equipment and utilities, and installing flood barriers or flood-proofing techniques. Focusing on resilience and risk reduction can help manage claim costs and limit flood damage, which might lead to lower claim costs and potentially quicker settlements.
