The figure came as part of a study that concluded 62 million residential locations in the US could be at moderate to extreme flood risk.
“The need for flood insurance far exceeds the current take-up rate,” said Marc Treacy, Managing Director of Flood Insurance at Verisk.
“Our study shows just how many homeowners are at significant risk for flooding and how big the opportunity is for insurers looking to find a new avenue for growth,” he explained.
Personal flood insurance in the US has largely been confined to the National Flood Insurance Program (NFIP) over the past 50 years, Verisk noted.
However, with the NFIP facing growing financial strain in the wake of massive storms, the industry is increasingly coming to appreciate the benefits of having a robust private market to provide coverage against the peril.
“Recent flooding events have challenged the long-held perception that flood insurance is only for those homes in FEMA high-hazard zones or along the coast,” Treacy continued.
“The perspective on protecting against flood loss, for both insurers and homeowners, needs to shift toward this: If it rains where you live, you are at risk of flooding. And it’s critical to understand the level of risk for each property, so homeowners can obtain the coverage they need and insurers can underwrite policies with precision.”
Verisk’s analysis of the personal flood market used a range of data and analytics resources, including prospective loss cost estimates from ISO and a bottom-up methodology for market sizing based on ISO MarketStance solutions.
It also utilized a granular risk exposure assessment of target markets by AIR Worldwide, using WaterLine.