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Private flood insurers say capacity is there, demand is the problem
Industry specialists at Hiscox point to only a small share of US homes buying flood coverage, even as flood exposure is widespread beyond federal high-risk zones.
Insurance Business reports that potential reforms to the National Flood Insurance Program could create growth for the US private flood market, but the immediate constraint is not capital availability.
According to Hiscox specialists, the private market can expand if reform changes the NFIP’s role, with insurers already using granular catastrophe models, property-level data and digital distribution to compete with the federal program. Hiscox flood underwriter Tom King said the industry has the capacity and appetite to support several years of growth.
Hiscox property divisional director James Brady added that standard US homeowners policies generally exclude flood, helping explain the low take-up of flood insurance. Brady said 99% of US counties have seen at least one flood event in the past 20 years, while changing weather and development mean older flood maps may not reflect current risk.
King said the current system can leave consumers outside mandatory purchase zones with a false sense of security, arguing that flood risk is far broader than federal maps suggest. He cited Houston’s Hurricane Harvey flooding, linking severity to extensive development and hard surfaces, and noted that population growth in coastal areas concentrates property values in locations exposed to storm surge, river flooding and heavy rainfall.