#United States #Neptune Flood #Flood Insurance #Risk Assessment #St. Petersburg, Florida

Neptune Flood Unveils Insights on Residential Flood Insurance

Introduction
Neptune Flood has recently published a detailed analysis focused on the U.S. residential flood insurance sector. The report produced by its Research Group underscores the essential role that private insurers could play in mitigating the expanding coverage gap present in flood insurance. Given that over 20 million homes in the U.S. are classified as moderate to severe flood risk, and only 3.8 million of these are currently insured, it points to an urgent need for both systemic reform and a pivot towards private market solutions.

Key Findings

1. Significant Coverage Gap:
Despite an increase in participation from the private insurance market, a staggering 97% of residential properties remain without any coverage, exposing millions of homeowners to the threat of catastrophic flooding.

2. Private Market Viability:
A thorough analysis conducted by Neptune's Data Science Group reveals that a notable 90-95% of policies from the National Flood Insurance Program (NFIP) align with the criteria needed for coverage by private insurers. Furthermore, for 30-40% of current NFIP policyholders, private insurers already provide equivalent coverage options at lower costs. Importantly, once NFIP subsidies are terminated under the new 'Risk Rating 2.0' framework, the private sector could supply affordable coverage for approximately 55% of existing NFIP policyholders, which is about half of the program's overall premium base.

3. Economic Considerations:
Since 1978, the NFIP has disbursed $129 billion (adjusted for 2024 inflation) in claims, with about $112 billion aimed at residential properties. The NFIP currently grapples with a $20.5 billion debt, burdening policyholders to the tune of nearly $2 million daily in interest payments to the U.S. Treasury without any principal repayments made since 2014. Driving private market participation could lessen taxpayer strain while improving overall financial sustainability.

Recommendations for Reforms

The report calls for specific reforms designed to unlock the potential of the private market, echoing suggestions put forward by the Department of Homeland Security (DHS):

• - Transitioning from broad government subsidies to needs-based assistance
• - Insisting on flood risk disclosures during real estate transactions
• - Banning NFIP coverage for new structures situated in special flood hazard zones
• - Easing the transition between the NFIP and private insurers
• - Increasing coverage limits to more accurately reflect replacement costs and mitigate underinsurance risks

Industry Perspectives

Trevor Burgess, CEO of Neptune Flood, commented, "Private insurers like Neptune Flood are uniquely positioned to close the coverage gap. By leveraging data science and AI-driven underwriting, we provide tailored solutions that address modern risk factors. Our approach is revolutionizing flood insurance, reducing costs while broadening protection for homeowners."

Matt Duffy, the Chief Revenue Officer of Neptune, emphasized the critical need for enhanced private market engagement: "Expanding private market participation is essential for creating a more resilient and sustainable insurance ecosystem. Through increased competition and innovative practices, Neptune aims to ensure that all homeowners are safeguarded against the rising threats posed by climate-induced flooding."

For further insights, the complete analysis can be accessed through Neptune Flood's official channels.

About Neptune Flood

As the leading provider of private flood insurance in the U.S., Neptune Flood is rapidly growing, presenting a robust alternative to the NFIP. Currently, the company covers nearly $100 billion across over 220,000 residential and commercial properties, signifying both the scale and stability it brings to the flood insurance marketplace.