Critical Impact: The Climate-Flood Connection

Catastrophic weather events are increasing in both frequency and severity due to climate change. Consider some of the major headlines we saw this year. Buenos Aires recorded a temperature of 106°F in mid-January – the second highest in 115 years. Sydney saw its wettest year since 1858. Throughout Europe, wildfires burned at least 775,941 hectares to date – the second-largest area on record. Here in the United States, we saw disastrous flood events all over the country including in St. Louis, Yellowstone National Park, eastern Kentucky, and most recently in Florida from Hurricanes Ian and Nicole.

Natural disasters caused $92 billion in economic losses during the first six months of 2022, according to?a recent report from Aon. Of those losses, $24.1 billion were attributed to flooding with just $4.7 billion of that insured – highlighting a stark 80% protection gap, which refers to the difference between the total economic loss and the amount covered by insurance. Unfortunately, it seems that this gap continues to widen, which directly impacts our ability to recover quickly from disasters. Liz Henderson, a senior managing director at Aon, said it perfectly in The One Brief: we’re the ones who absorb these losses – our neighbors, business owners, communities and local governments.

It's time for agents and homeowners to pay close attention to our shifting global weather patterns and how they impact the peril of flood. We know that flood has been, and always will be, complex and dynamic. While it’s tricky to determine when and where a flood is most likely to occur, what is clear is that many people face greater flood risk than they did just a few years ago – and many don’t even realize it.

Urban flooding is occurring in places it hasn’t historically – from Los Angeles to New York City. Wildfires set the stage for more intense storms and powerful mudslides. This year alone, we’ve seen multiple images of homes sliding off their foundations and collapsing into rivers and even the ocean. And as the planet warms, hurricanes are gaining strength and persistence due to a weather phenomenon dubbed “rapid intensification”.

These insights point to one thing. We must acknowledge that flooding is the most common and costly disaster in the United States. And while we cannot control weather threats, we can help protect ourselves with flood insurance. Yet only 27% of homeowners carry it, according to the Insurance Information Institute.

At Aon Edge, we’ve heard time and again from people who thought they could rely on their homeowners’ policies to cover their flood losses, only to learn they don’t. As we look ahead to 2023, I urge agents to have honest conversations with clients about their true flood exposure. Everyone lives in a flood zone. Water does not stop at the artificial lines that define where flood insurance is required and where it is not. The weather is changing, and we must keep up. Our homes, communities and livelihoods depend on it.?

Agents: We’ve recently streamlined our digital appointment process. If you’re new to Aon Edge or you have a client who’s looking for flood insurance immediately, we can help. Learn how you can get appointed with Aon Edge today: https://bit.ly/3QbQF5Y.????