Fitch: US private flood insurance exposure remains limited despite accelerating growth

(The Insurer) - While the U.S. private flood insurance market has experienced notable growth in recent years, only 4% of homeowners have flood insurance, according to a new report from Fitch Ratings.

Fitch noted that recent flooding in Texas is estimated to cause economic losses of $18 billion to $22 billion, according to AccuWeather, with insured losses expected to be substantially lower, underscoring the gap between economic and insured flood losses.

Fitch said that it 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.

Private residential policies nearly doubled from 277,000 in 2020 to around 569,000 by 2024, with premium revenue growing by 240% to $0.5 billion.

However, private flood insurance remains small compared to other lines, with homeowners direct premiums written totaling $170 billion in 2024, limiting the impact of flood losses on overall industry results for 2025.

Underwriting results have been favorable, with a direct case incurred loss ratio below 50% in most years and an average direct combined ratio of 60.4% from 2018 to 2024, except for losses in 2017 due to Hurricane Harvey.

Fitch 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.