The devastation caused by hurricanes Harvey and Irma highlights the problem of inadequate flood insurance in the United States, according to Lloyd’s.
The insurance market believes reforms are needed to move more risk into the private sector. Currently, most flood risk is borne by the National Flood Insurance Program, a federal program that was already $23 billion in debt before Harvey and Irma slammed into the southern United States.
“The devastation caused by recent hurricanes is a reminder of the terrible costs of natural catastrophes,” said Lloyd’s CEO Inga Beale. “It also highlights the chronic issue of communities without insurance and without the means to rebuild their lives. We urgently need reform to the flood insurance market in the US to make these communities more resilient. All parties – governments, the insurance industry and policyholders – have a responsibility to do this.”
Beale said that as climate change played havoc with traditional weather patterns, insurers would have to find new ways to pay the rising costs.
“That’s why Lloyd’s is actively pursuing the further development of the private flood market in the US, which will help promote flood insurance and encourage more people to take up cover,” she said. “We need clear authorization from Congress for the private flood insurance market to allow the market to continue to grow and move more risk into the private sector. This will provide consumers with more choice and better coverage options in some cases.”