62 million residential locations in the United States that are at moderate to extreme flood risk, according to a Verisk (Nasdaq:VRSK) analysis released today. Verisk is a leading data analytics provider.
The analysis, part of a new white paper titled Sizing the Personal Flood Insurance Market, estimates that reviving the private flood insurance market could generate $41.6 billion in written premiums for insurers from owner-occupied homes in the 48 contiguous states.
"The need for flood insurance far exceeds the current take-up rate," said Marc Treacy, managing director of flood insurance at Verisk. "Our study shows just how many homeowners are at significant risk for flooding and how big the opportunity is for insurers looking to find a new avenue for growth."
Over the past half century, personal flood insurance in the United States has been largely confined to the National Flood Insurance Program (NFIP). But as the NFIP faces growing financial strain in the wake of massive storms, the industry has come to understand the benefits of having a robust private market insure against the peril.
"Recent flooding events have challenged the long-held perception that flood insurance is only for those homes in FEMA high-hazard zones or along the coast," said Treacy. "The perspective on protecting against flood loss, for both insurers and homeowners, needs to shift toward this: If it rains where you live, you are at risk of flooding. And it's critical to understand the level of risk for each property, so homeowners can obtain the coverage they need and insurers can underwrite policies with precision."
Verisk's analysis of the personal flood market used an array of Verisk data and analytics resources, including: actuarially sound prospective loss cost estimates from ISO; a proven bottom-up methodology for market sizing based on ISO MarketStance solutions; and a granular risk exposure assessment of target markets by AIR Worldwide, using WaterLine(TM).
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Verisk (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, energy and specialized markets, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk draws on unique data assets and deep domain expertise to provide first-to-market innovations that are integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk helps customers protect people, property, and financial assets.
Headquartered in Jersey City, N.J., Verisk operates in 30 countries and is a member of Standard & Poor's S&P 500(R) Index. In 2018, Forbes magazine named Verisk to its World's Best Employers list. For more information, please visit www.verisk.com.