Maximizing Flood Preparedness Benefits for Insurers and Policyholders, Swiss Re Institute Study Finds

Flood preparedness measures, such as levees and dykes, can significantly reduce disaster costs for both insurers and communities, according to a recent Swiss Re Institute study. These infrastructures, when built to optimal standards, may reduce flood damage by up to 90% in urban areas and provide a financial return of up to ten times their cost. As climate change increases the frequency and severity of floods, Swiss Re’s analysis underscores that investment in flood defences—whether through infrastructure or policy interventions—is essential for long-term economic resilience.

The study highlights ‘grey infrastructure’ solutions, like dykes and levees, as especially effective in protecting coastal areas, but also points to nature-based solutions, such as coastal vegetation, as viable alternatives in less populated regions. In both cases, cost-benefit ratios demonstrate that the financial savings on post-disaster recovery outweigh initial implementation costs. Additionally, land-use policies and zoning restrictions offer strategic advantages for reducing flood risks, particularly in regions with growing urbanization.

Swiss Re emphasizes the importance of public-private collaboration in scaling climate adaptation. Early insurance industry involvement in planning can facilitate these initiatives, reducing residual risk and promoting economic stability. Swiss Re’s Veronica Scotti advocates for increased private funding for climate resilience projects, noting the importance of measuring adaptation benefits to guide effective investment and bridge funding gaps. By quantifying these benefits, insurers and public entities can better align on impactful strategies for flood adaptation and resilience.