US flood insurance
In the US, most household property policies from private insurers exclude flood. Flood insurance in the US is mostly covered by a government insurance programme, which runs through 50 insurers and covers 23 000 communities. But despite an effort to develop the federal programme, five out of six homes in the US are still without flood cover.
Changing flood insurance
Since 2017, however, Swiss Re’s flood solution has given insurers the option to add flood cover to existing policies or offer it as a stand-alone product. The flood solution is powered by Swiss Re’s proprietary flood model, which includes over 400 000 modelled events for the US alone. This insight allows insurers to write risk-adequate pricing for floods.
Chris Carpenter, a flood solution expert and member of the US claims team, explains: “We are at the frontline of changing flood insurance. A few years ago, it wasn’t in a private insurance policy. Today, our clients want to be involved in flood insurance, and that means they need the necessary skills and knowledge.”
Upskilling our partners
Swiss Re has not only focused on improving flood models, but also on providing extensive training to clients’ claims teams, who will ultimately service policyholders.
Since their insurance policies generally excluded floods claims, these teams often lack insight into how to assess flood damage. Swiss Re’s claims training walks claims teams through various scenarios to identify how specific flood issues fit into policies and how to optimise claims processes.
Swiss Re’s efforts proved especially valuable to clients in Florida. In the months following Hurricane Ian, Chris and the US team helped Swiss Re’s clients process extensive claims for flood damage in the state. “We aim to help bring flood insurance to more homeowners in the US”, notes Chris. “This is just the beginning of our journey.”
Chris and the flood solutions teams make sure insurers have the skills, products and risk transfer in place to build resilient flood insurance and close protection gaps.
Swiss Re has carefully steered its natural catastrophe business and for P&C Re, achieving an average 10-year combined ratio of 77%. As the global property reinsurance market moved into a “hard market” in 2022, Swiss Re achieved strong price increases and grew its business.
In 2022 alone, global economic losses from natural catastrophes soared to USD 275 billion. The insurance industry provided USD 125 billion in claims payments. However, the protection gap remained well over 50% of all losses.
Hurricane Ian is estimated to have cost the insurance industry USD 50–65 billion, making it the second-costliest hurricane on record. Swiss Re expects to provide USD 1.3 billion in claims to hundreds of clients for this event.
Research and development
For its natural catastrophe business, Swiss Re currently employs more than 50 dedicated scientists who maintain around 200 natural catastrophe models. These models provide insights into over 90% of the world’s insured exposures.