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Investing.com -- Only 4% of U.S. homeowners have flood insurance despite significant growth in the private flood insurance market in recent years, according to a new report from Fitch Ratings.
The report highlights the substantial gap between economic and insured flood losses, pointing to recent flooding in Texas that is estimated to cause economic losses of $18 billion to $22 billion, according to AccuWeather. Insured losses are expected to be substantially lower.
Private residential flood insurance policies have nearly doubled from 277,000 in 2020 to approximately 569,000 by 2024. During this period, premium revenue grew by 240% to $0.5 billion.
Despite this growth, private flood insurance remains a small segment compared to other insurance lines. Homeowners direct premiums written totaled $170 billion in 2024, which means flood losses will have limited impact on overall industry results for 2025.
Underwriting results in the flood insurance sector have been favorable, with direct case incurred loss ratios below 50% in most years. The average direct combined ratio was 60.4% from 2018 to 2024, with the exception of losses in 2017 due to Hurricane Harvey.
Fitch anticipates continued expansion in the private flood market, driven by advancements in flood mapping technology, regulatory changes, and risk-based pricing for National Flood Insurance Program policies.
The report also noted that U.S. private flood insurance underwriting exposure is largely supported by the global reinsurance market and Lloyd’s of London syndicates, which have increased their exposure to U.S. flood risks over the past decade.
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