Deluge-ional: Time for smarter collaboration against rising flood risks

Floods – especially those caused by heavy rainfall – can occur anywhere, making them one of the most common natural disasters on our planet. The damage in the wake of these extreme weather events is heartbreaking, with losses running into multiple billions. 

Between 1980 and 2019, flood losses amounted to $1,092bn, of which only 12% were insured¹. For those who haven’t experienced it themselves, it is hard to comprehend the extent of the stress and devastation that occurs, not just during the flood, but in the months, weeks, and sometimes years that follow. Floods are unique when it comes to the extent of havoc they wreak, claiming everything on their treacherous paths from homes and valuable possessions to lives and livelihoods.

With the scientific knowledge we have at our disposal today, as well as the capabilities of meteorological agencies that are able to forecast flooding events sometimes days ahead of the deluges, why were we unable to avoid the catastrophic situations and losses of recent times?

One reason is that many communities and authorities misunderstand or diminish local risk. As a result, they are caught unprepared to respond appropriately to the impacts of flooding. To make things worse, awareness in many communities remains low. Home and business owners often fail to purchase adequate insurance, leaving them with no one to turn to when disaster strikes. According to a new report commissioned by our daughter company LV= General Insurance, even where awareness is present, people are reluctant to invest in coverage and making their homes flood resilient due to the cost-of-living crisis.

Two things are clear:

• Climate change is creating risk on an unprecedented scale. While insurers must continue to promote and develop coverage options based on accurate risk assessments in and outside of flood zones, the role of insurance companies doesn’t end there. 
  
• Extreme weather events cannot be prevented, but the degree of their impact can be significantly reduced. Preparedness in order to minimize the loss of life and property is key. 

According to Prof. Dr. Michael Kunz, Spokesman for Disaster Management and Risk Reduction at the Karlsruhe Institute of Meteorology and Climate Research, it’s all about increasing resilience. “An essential component of resilience is the risk competency of each individual, which leads to rapid and appropriate actions of the population when a disaster occurs. Acquiring risk competency starts in school but should also be incorporated into the dialogue of different populations and stakeholders – and, of course, in the insurance sector,” says Kunz.

It’s a long-term view shared by Christopher Townsend, Member of the Board of Management of Allianz SE. “Indeed, it is our responsibility as an insurance company to understand local risks, both so that we can sustainably insure them and provide risk advice to society and customers in order to build resilience. This is why our experts around the world research and analyze the risk profiles of natural catastrophes in all countries where we conduct business.”

Ultimately, it is a combination of insurance and preparedness that will protect communities in the long run, especially in the face of a long battle against climate change. For Klaus-Peter Roehler, member of the Allianz SE Board of Management, it’s clear that smart working together is essential. “A viable solution involves a holistic approach; collaboration across science, business and politics, but also right down to the individual level,” says Roehler. “It has to include elements such as individual prevention, intensive flood protection, a rethinking of building and land use planning, warning and rescue systems, as well as insurance solutions for the broad population and their affordability. Political support is essential, especially when it comes to heavy rain and flood risks. Here, stringent restrictions on building in floodplains play a central role, as do flood protection and river basin management.”

Roehler’s comments on building restrictions hold particular relevance in the UK, a country that’s had more than its fair share of floods. In England alone, it is estimated that floods cause £1.1bn of damages per year, and LV= General Insurance pays out £32,000 on average for a flooding claim. In the UK, the risk of flooding is exacerbated not only by climate change but also by the growing need for housing. More development means soil sealing as green spaces are paved over with streets and buildings. Rain falling on these sealed surfaces will run directly into already stretched drainage systems and rivers, further increasing flooding if mitigation measures are not taken. In England, such measures are not required for developments of less than nine houses. The increased risk of surface-water flooding is particularly difficult to digest given that one in six homes in the country are already at risk of flooding, and further highlights the need for a holistic and interdisciplinary approach.

Martin Milliner, Claims Director at LV= General Insurance, says: “ Our recent report highlights significant issues that continue to put an ever-increasing number of communities at risk, and it’s crucial that property developers, insurers and local authorities work together to tackle this important issue.”