The U.S. private flood insurance industry is an emerging market with the potential for risks and rewards, none as important as helping Americans become more resilient against devastating floods. Several converging developments have transformed the formerly niche offering into a potential sustainable, large-scale business. These developments include rapid advances in technology, an abundance of risk capital, a break in the longstanding legislative status quo, and the human and economic impact of recent disasters on consumer awareness of the increasing flood hazard.
Establishing a greater private flood insurance market should benefit insurance consumers, helping to close the protection gap and improve the resilience of households and economies against future flood-related catastrophes. But as with most great undertakings, hard work and foresight are necessary for success. In this paper, Milliman consultant John Rollins explores some questions and challenges for aspiring U.S. private flood insurers.