Deadly floods set records across the United States in 2025, with flash flood warnings issued at an unprecedented rate. Over the past two decades, flood events have affected a significant portion of U.S. counties, increasing vulnerability as more communities face exposure, especially further inland.
Despite these risks, many homeowners remain without adequate protection. This has highlighted a growing gap in insurance coverage as populations expand into high-risk areas. A recent report examines how the insurance industry can help address this gap and emphasizes the need for public outreach and investment in mitigation to reduce losses for all parties involved in flood resilience.
Floods, along with severe convective storms and wildfires, were responsible for almost all insured global losses last year, totaling $98 billion out of $108 billion. In the U.S., much of the damage was caused by inland flooding from tropical systems and severe storms, including a historic event in Central Texas that resulted in over 130 fatalities.
The National Oceanic and Atmospheric Administration (NOAA) defines “weather whiplash” as rapid swings between extreme environmental conditions. This phenomenon is becoming more common in states like Texas and California, where long droughts are followed by intense rainfall and flooding. These transitions were driven by increased tropical moisture due to higher ocean temperatures and contributed to a record number of such events in 2025.
Many homeowners mistakenly believe that standard policies cover flood damage or assume they are not at risk unless required by their mortgage lender. Research from Munich Re and Triple-I found that 64 percent of homeowners did not think they faced flood risk. Some drop their flood insurance after paying off their mortgage to save money.
More than half of those with flood insurance are covered through FEMA’s National Flood Insurance Program (NFIP). However, federal regulations introduced in 2019 allowed private insurers to enter the market if they met certain criteria. As a result, between 2016 and 2024, the total flood insurance market grew by nearly 43 percent—from $3.29 billion to $4.7 billion—with private companies now writing just over a quarter of all policies.
A study from the U.S. Chamber of Commerce and Allstate found that every dollar invested in disaster resilience can prevent up to $33 in future economic costs. The report called for coordinated action among individuals, businesses, and government entities to reduce climate-related losses.
The NFIP’s Community Rating System (CRS) is one example of public-private collaboration aimed at improving resilience. The CRS provides premium discounts—up to 45 percent—for homeowners whose communities adopt stronger floodplain management practices than required minimums. By encouraging better building codes and public awareness efforts, these initiatives can help protect vulnerable areas even as other programs like FEMA’s Building Resilient Infrastructure and Communities (BRIC) face changes or cancellations.
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