reThought Flood

Unlocking the Potential of Predict and Prevent for Flood

Flood insurance has traditionally operated under a model of indemnification, where the focus has been on recovering after losses occur. This method, while necessary, often leaves communities and individuals grappling with the losses of irreplaceable items and enduring trauma. Floods can destroy homes and businesses, and leave devastation behind long after the flood waters recede.Today, however, advancements in technology and data analytics are paving the way for a transformative approach: moving from indemnification to prevention.

The current landscape of flood insurance, where NFIP is burdened by billions in debt and constrained by the unpredictability of flood events, is ripe for a paradigm shift. With atmospheric and oceanic modeling improving, digital transformation leading to better data analytics, and new insights from recent storm experiences, we are at the cusp of being able to predict and prevent flood events more effectively than ever before. With climate change leading to more and more devastating events, and new infrastructure and buildings going up all the time, it’s not a moment too soon to harness these new technologies.

Predictive tools and technologies are becoming increasingly sophisticated, enabling us to foresee where water will flow and the potential impact on communities. These predictions, however, are only as powerful as the actions they precipitate. It’s here that the role of education becomes crucial. By educating homeowners, commercial property owners, municipalities, and insurance providers about the risks and the preventative measures available, we can transform the way people think about and manage flood risk.

Moreover, mitigation strategies such as the installation of Permanent Drain Backflow Preventers, Aqua Fences, and MindHome Flood Barriers, are becoming more affordable and accessible, thanks to economies of scale. (These are intended as examples, not endorsements). These tools not only protect individual properties but also contribute to the resilience of entire communities.

The insurance industry must embrace these predictive and preventative strategies to reduce the frequency and severity of losses. By shifting the focus from responding to disasters to preventing them, insurers can preserve value, prevent trauma, and, most importantly, save lives. Insurers can and should incentivize their insureds to leverage these tools.

This approach also holds significant economic benefits. By reducing the overall cost of claims, insurance companies can offer more competitive premiums, which in turn encourages wider uptake of flood insurance policies. Furthermore, investing in community-wide prevention measures can lead to reduced insurance costs for everyone within the community. The National Institute of Building Sciences says that each dollar spent on mitigation can reduce flood losses between $5 to $8. This is a return on investment that we cannot and should not ignore.

The future of flood insurance lies in harnessing predictive analytics and investing in preventive measures. By doing so, we can turn the tide against the increasing threat of floods, transforming potential disasters into more manageable risks.

Derek Lynch

Derek Lynch is reThought Flood’s Chief Underwriting Officer, with responsibility for development and delivery of products that sustainably close the flood protection gap. With 15 years of insurance-sector experience, Derek now has ultimate responsibility for providing the tools and products that will shift floods from tragedy to inconvenience, and for educating the insurance industry and property owners about flood risk and coverage. That last part is his driving force: unlike most of us, who got into insurance only because it was the best option available at the time, Derek chose the industry so that he could help people in times of need. “We live in a new world,” Derek says. “Flood exposure is changing everywhere, prediction tools are evolving, insurance coverage is shifting, and so is our ability to implement physical mitigations efficiently. We may be the only insurers trying to solve the underlying issues, and we have the expertise to actually make it work.”