Neptune Flood Releases Analysis of Primary Residential Flood Insurance

Largest Private Flood Insurance Company Shares Insights and Reform Opportunities for the Residential Flood Market

ST. PETERSBURG, Fla., Dec. 19, 2024 /PRNewswire/ -- Neptune Flood has released an analysis of the U.S. residential flood insurance market by its Research Group, emphasizing the critical role private insurers can play in addressing the nation's growing flood coverage gap. With over 20 million U.S. homes at moderate to severe flood risk and only 3.8 million insured, the report highlights the pressing need for systemic reforms and a shift toward private market solutions.

Key Insights:

• Coverage Gap: While private market participation has grown, 97% of residential structures remain uninsured, leaving millions of homeowners vulnerable to catastrophic flooding.
• Private Market Potential: Neptune's Data Science Group conducted a detailed analysis of the National Flood Insurance Program (NFIP), revealing that 90-95% of NFIP policies meet the risk criteria for private insurers. For 30-40% of NFIP policyholders, private insurers already offer equal coverage at lower premiums, representing 40-45% of the NFIP's premium base. Once NFIP subsidies are fully phased out under Risk Rating 2.0 (RR2.0), the private market will offer more affordable coverage for ~55% of current NFIP policyholders, equating to ~50% of its premium base.
• Economic Strain: Adjusted for inflation, the NFIP has paid $129 billion (in 2024 dollars) in claims since 1978, with $112 billion of that being for residential buildings. The program currently carries a $20.5 billion debt burden, with policyholders paying nearly $2 million daily in interest to the U.S. Treasury, while no principal repayment has been made since 2014. Expanding private market participation can alleviate taxpayer reliance and enhance financial sustainability.

Opportunities for Reform: This report calls for targeted actions to unlock private market potential, all of which reflect legislative proposals put forth by the Department of Homeland Security (DHS):

• Replacing current broad government subsidies with means-based subsidization
• Requiring flood risk disclosure before real estate transactions
• Prohibiting NFIP coverage for new construction in special flood hazard areas
• Removing barriers to switching between the NFIP and private insurers
• Raising coverage limits to align with replacement costs and reduce underinsurance

"Private insurers like Neptune Flood are uniquely positioned to close the coverage gap," said Neptune CEO Trevor Burgess. "Leveraging data science and AI-driven underwriting, Neptune provides innovative solutions tailored to modern risks. With nearly $100 billion in coverage across 222,000 properties, Neptune's private market approach is transforming flood insurance, reducing costs, and offering broader protections to homeowners."

"This report underscores the urgency of expanding private market participation to build a more resilient and sustainable insurance ecosystem," said Neptune CRO Matt Duffy. "By fostering competition and innovation, Neptune aims to ensure all homeowners are protected from the increasing threats of climate-driven flooding."

Click here to view the complete analysis.

About Neptune Flood

As the largest provider of private flood insurance in the United States, Neptune Flood continues to expand rapidly, offering a competitive alternative to the NFIP. Today, Neptune provides nearly $100 billion in coverage across over 220,000 residential and commercial properties, demonstrating both scale and stability within the flood insurance marketplace.

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SOURCE Neptune Flood