In a new report analysing the U.S. residential flood insurance market, Neptune Flood has underlined the critical role private insurers can play in addressing the nation’s growing flood coverage gap.
According to the firm’s research, more than 20 million homes in the U.S. face moderate to severe flood risk, yet only 3.8 million are insured, highlighting the need for comprehensive reforms and a move toward private market-driven solutions.
“While private market participation has grown, 97% of residential structures remain uninsured, leaving millions of homeowners vulnerable to catastrophic flooding,” Neptune’s report explained.
Meanwhile, as per Neptune’s Data Science Group, which conducted a detailed analysis of the National Flood Insurance Program (NFIP), 90-95% of NFIP policies meet the risk criteria for private insurers.
For 30-40% of NFIP policyholders, private insurers reportedly 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, the private market will offer more affordable coverage for ~55% of current NFIP policyholders, equating to ~50% of its premium base,” Neptune’s report said.
The firm continued, “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.”
Neptune CEO, Trevor Burgess, commented, “Private insurers like Neptune Flood are uniquely positioned to close the coverage gap. 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.”
In September of this year, Neptune hit a major milestone of 200,000 policies and $250 million in premiums.
The firm started in 2018 with a single residential flood insurance product in Florida. Since then, it has grown to cover 49 states and Washington, D.C., offering a wide range of residential, commercial, and condominium flood insurance options.
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