Surge in Demand for Flood Insurance Across the United States

Severe weather events are becoming increasingly common, and as a result, the demand for flood insurance is rising. Insurers now face the challenge of balancing this added risk. GlobalData surveys reveal that demand for flood damage coverage is very high both in the US and globally, while Guy Carpenter has warned of the growing risk of flood damage as we approach 2025.

GlobalData’s 2024 Emerging Trends in Insurance Survey found that 61.4% of US consumers considered flood coverage as part of household insurance to be either desirable or very desirable. This was slightly lower than the global combined average of 67.0%, which was driven by very high scores in South Africa (84.4% combined) and China (77.7% combined). Nonetheless, it underscores the strong demand for flood damage coverage in the US.

How Desirable Is Flood Damage Coverage in Personal Household Insurance Policies? The US, 2024

This presents a dilemma for household insurers as they design policies. Many regions globally, particularly in the US, are becoming increasingly high-risk, making it challenging for insurers to offer comprehensive coverage. While insurers can and will raise premiums, inflation remains high in many countries, including the US, leaving consumers unable to sustain further financial pressure. Guy Carpenter also warns that previously low-risk areas are likely to become more flood-prone due to heavy rainfall, leading insurers to limit their exposure in more regions.

The strong demand for flood coverage in the US and elsewhere indicates that insurers willing to offer it can boost retention and penetration rates. For insurers, it’s a matter of balancing risk and determining the level of potential flood damage exposure they are willing to accept. To capitalize on this trend, insurers should focus on preventative measures, such as ensuring properties are well-prepared and providing advanced weather warnings to customers.

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