Floods Are South America's Biggest Threat—How Can We Get Ahead of the Risk?

While South America is familiar with extreme weather, the latest CRED Crunch report reveals a concerning new trend: floods are the region’s most frequent and deadly natural disasters. Over the past two decades, 505 hydrological disasters have been recorded, leading to more than 10,000 deaths, and displacing millions.

This isn’t just a problem for policymakers - it’s a wake-up call for businesses, communities, and insurers.

The report highlights some critical insights:

• Brazil, Colombia, and Peru are the hardest-hit countries, with major flooding events clustered around urban areas.
• Urbanization is driving up flood risk. As cities expand, more people and infrastructure are exposed to floods. The fastest-growing cities—such as Rio de Janeiro and Medellín—are seeing increased flooding due to unplanned development in vulnerable zones.
• Floods are becoming more frequent as extreme rainfall events intensify due to climate change. In Brazil’s Rio Grande do Sul, a devastating flood affected over 2.3 million people in 2024.

The Cost of Inaction

Flooding isn’t just a climate and humanitarian crisis—it’s an economic one. The report estimates billions of dollars in damages, and many of these losses are uninsured. Traditional flood maps often fail to capture real-time risks, making it difficult for businesses, communities and governments to plan effectively.

For insurers, this is a growing problem. The unpredictability of floods is driving higher premiums, reduced coverage, and in some cases, complete market withdrawal (See our article for more on this topic: How Flood Risk Is Driving an Insurance Protection Gap in the US). We’ve already seen this happen in the U.S., where some insurers have stopped offering coverage in flood-prone areas, and without better predictive tools, South America could face a similar scenario, even with a lower insurance penetration in the region.

In South America, in 2023, losses related to natural disasters were of approximately USD16,000 millions, but only USD5,100 million were insured, which evidences the big insurance adoption gap (only 2% of insurance adoption in Colombia and the Andean region in 2023), and most the insurance that do exist are parametric and focused on the agricultural sector and not in the private housing sector.

A Data-Driven Approach to Flood Resilience

At 7Analytics, we believe that flood risk management needs to be predictive, not reactive. Our AI-powered modeling system provides real-time, hyperlocal flood forecasting—helping businesses, insurers, and policymakers make informed decisions before disaster strikes.

Here’s how data-driven flood prediction can change the game:

• Better urban planning – Cities can identify high-risk areas and design infrastructure that mitigates flooding before it happens.
• Smarter insurance – Insurers can price risk more accurately, ensuring that flood-prone areas aren’t left without coverage.
• Proactive disaster response – Governments and emergency planners can allocate resources more efficiently when they know where floods will hit hardest.

The bottom line is that communities can’t afford to wait

The figures in the latest report tell a clear story: floods are worsening, and exposure is growing. The question is whether we’ll continue reacting to disasters—or start preparing for them.

At 7Analytics, we’re working to shift the industry towards predictive flood risk modeling that saves lives, protects infrastructure, and strengthens insurance markets. The technology exists—the challenge is adoption. Are you ready?

How is your industry preparing for increasing flood risks? Let’s talk.

#FloodRisk #ClimateResilience #DisasterPreparedness #7Analytics

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