Unprecedented Floods of 2023 Highlight Rising Economic and Insurability Challenges in the U.S.

In 2023, the United States was struck by four massive floods, each causing over $1 billion in damages, affecting areas from California to the East Coast. These disasters occurred across different seasons, challenging previous expectations about flood patterns and intensity. These events are part of a disturbing trend where smaller, yet destructive floods are becoming more frequent, fueled by factors like high tides and atmospheric rivers. The traditional view of floods as secondary perils is shifting, with climate change escalating their frequency and severity to levels comparable to primary perils such as hurricanes.

The efficacy of U.S. flood hazard maps has been brought into question as they fail to incorporate contemporary climate science, making them less effective for communities and insurers in managing flood risks. Recognizing this gap, Swiss Re has integrated advanced, high-resolution flood maps into their CatNet tool, enhancing their ability to offer precise risk assessments. These maps, developed by Fathom, a U.K.-based company specializing in water intelligence, offer unprecedented accuracy and are pivotal in underwriting and risk management strategies for insurers.

The importance of such tools is underscored by the increasing unpredictability and economic burden of floods. As climate change continues to influence weather patterns, the insurance industry and communities must adapt to these evolving risks. Enhanced flood risk models and data integration into underwriting processes are crucial steps forward, allowing for more nuanced risk pricing and better preparation for future threats.