Katrina Doesn't Motivate Many Homeowners to Protect Their Investment
8%-Increase in Flood Insurance Sales Driven By More Affluent, Better Educated Consumers
WARREN, NJ, March 2, 2006 - Despite Hurricane Katrina's devastation, a new survey says that most Americans are not very concerned about buying flood
insurance for their homes.
Only 14 percent of Americans say they have purchased flood insurance for their primary residence, according to the survey
of 700 homeowners, conducted for the Chubb Group of Insurance Companies by Opinion Research Corporation. Seven of the 101
homeowners (8 percent) who had flood insurance purchased it following Hurricanes Katrina, Rita and Wilma; all the new purchasers
were more affluent college graduates. Ninety-one percent of the 101 homeowners said they already had it and did not purchase
more coverage following the hurricanes.
"Chubb's survey clearly shows that, other than some better educated individuals with higher incomes, many Americans are risk
takers when it comes to protecting their homes, valuables and financial well-being from flood damage," said Eric Pruss, senior
vice president of Chubb & Son and strategic marketing officer for Chubb Personal Insurance. "However, this is a risk that
few people can afford to ignore, especially in light of seeing the potential for devastation."
What Is Damaged?
Among those whose home has been flooded, 34 percent said carpeting or wood floors were destroyed. Other destroyed possessions
included sentimental items (19 percent), furniture (15 percent), personal papers and information (12 percent), and art or
collectibles (4 percent).
Why Do People Buy Insurance?
Those who have purchased a flood insurance policy said they did it because:
- While their house is not near a body of water, they are taking no chances (28 percent);
- their mortgage lender required it (27 percent);
- their house is near a body of water (24 percent); or
- their insurance agent or broker recommended it (20 percent).
Among those who purchased a flood insurance policy, 25 percent have purchased excess flood insurance policy from a private
insurer that provides higher home and contents limits beyond the National Flood Insurance Program. (The NFIP's maximum home
limit is $250,000 and contents limit is $100,000.) These individuals tend to have higher incomes and levels of education and
primarily reside in metropolitan areas.
What Should the Government Do?
Survey participants were very opinionated about the role of the government in rebuilding flood damaged homes. Only 31 percent
agreed that the federal government should bail out those whose homes were destroyed by flooding and who did not purchase flood
insurance. Sixty-eight percent said state and local governments should impose restrictions on building along coastal areas.
Fifty-nine percent said it makes no sense to rebuild a city that is below sea level after flood damage.
A leading insurer of custom, historic and other fine homes, Chubb also is noted for providing highly-regarded property and
casualty insurance products and services for luxury automobiles, fine arts and antiques, and other valuable possessions. Additional
information on Chubb's personal insurance offerings can be found at www.chubb.com/personal.
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property
and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb's
global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
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