Survey Shows Lack of Flood Preparation Among US Mid-Market Businesses

A new survey found that US mid-market businesses are both largely unaware of and unprepared for the flood risks facing their businesses.

According to the Chubb Commercial Insurance Flood Risk Survey report, some 85 percent of companies mistakenly believe their property insurance covers some, all, or most types of flooding. In addition, only a small minority of businesses recognize that flooding is the most common and costly natural disaster, Chubb found.

"Taken together, the survey results show a severe underestimation of the gravity of commercial flood risk and underscore the urgent need for education around the severity and frequency of floods, even in traditionally low-risk areas," a Chubb statement said.

Chubb directed the survey to insurance brokers, who the insurer said are well positioned to understand their clients' awareness of flood exposures as well as their understanding of available insurance protections and familiarity with risk mitigation measures. The survey report is based on responses from 332 insurance brokers located in regions across the United States.

According to Chubb, 84 percent of brokers surveyed reported that their client bases do not purchase flood insurance.

The survey found the South as the US region with the biggest gap between the purchase of flood insurance and the perceived need at 31 percent, followed by the East at 28 percent, the West at 27 percent, and the Midwest at 23 percent.

Chubb said that the misconceptions and coverage gaps revealed in the survey demonstrate broader misunderstandings about preventing and mitigating flood risk. Some 69 percent of brokers surveyed said they believe a small minority of businesses know that flooding is the most common and costly natural disaster, while 45 percent of brokers said their clients don't even request a quote for flood insurance.

"These findings create a sense of urgency within the insurance industry to clarify coverage details so that commercial property owners are not surprised when they discover their flood losses are not covered by existing policies," the Chubb statement said. "Businesses may want to focus on building resilience into their properties and operations to ensure they are adequately prepared for the long term."