Moody's reported that two-thirds of modeled residential flood losses in the U.S. remain uninsured. This exposes homeowners and the wider economy to significant financial risk.
The firm attributes this persistent underinsurance to outdated flood maps. These maps fail to include many flood-prone areas, leaving homeowners without mandatory coverage requirements.
Moody's suggests this large protection gap presents a considerable opportunity for private insurers. Advances in catastrophe modeling and more granular pricing methodologies, such as FEMA's Risk Rating 2.0, position the private market to better underwrite flood risk and expand coverage into underserved areas.