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Education is essential to close protection gaps in flood events: Swiss Re’s Wolfe

Swiss Re logo flooded street homes.jpg

Flood coverage is one area where the insurance industry can close protection gaps, but carriers and agents need to increase their efforts to educate clients about this peril, Swiss Re’s US P&C president told this publication.

It is an area where the industry can “solve problems that we have not been able to successfully solve in the past,” Keith Wolfe said. He was speaking with Inside P&C at the 2021 APCIA Annual Meeting in Denver, Colorado.

In the US, carriers mostly communicate these perils to clients through independent agents, and they have been trying to give a clear message about the necessity of flood coverage.

Swiss Re, in particular, has paired some flood coverage with homeowners' policies, and so far, it has seen more success in personal lines than in the commercial space.

According to Swiss Re’s estimates, the US protection gap in the flood space is currently around $36bn, as about 95% of homes across the country don’t have flood cover.

The effects of Hurricane Ida on the Northeast US were a clear example that additional efforts are required to get the economic and the insurance loss figures, when an event occurs, much closer to each other.

The remnants of Ida hit New York, New Jersey and other areas, damaging hundreds of homes with water infiltration that didn’t have flood coverage.

“By the time [Ida] reached there, there wasn’t really any material wind at all; it was all a rain and water event,” Wolfe said.

Private flood was also a frequent topic among panels at APCIA’s Annual Meeting.

The event comes amid the busy reinsurance renewal season, with experts estimating that current market firming dynamics will continue well into 2022.

One of the few exceptions by line of business is workers’ comp, where loss trends have continued to decline, justifying a further decline in rates in the coming months.

Most P&C business lines “have seen substantial primary rate improvement and also some reinsurance rate firming,” Wolfe said.

“There is nothing that indicates to us at Swiss Re that there is something fundamentally changing in the inflationary environment or the litigation environment or the regulatory environment, that’s going to be materially different than what we witnessed this year,” he added.

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