A recent report from the Neptune Research Group paints a stark picture of the growing flood threat in Texas and the widening insurance gap that could amplify its impact. With more than 2.1 million properties projected to face flood exposure in the coming decades, and more than 200,000 properties likely to flood with near certainty, the findings emphasize the urgent need for improved flood mapping, increased insurance uptake, and strategic risk mitigation.
Flood Risk Outpaces Insurance Coverage
The data reveals a sobering reality: Texas is significantly underprepared for future flood events. According to the First Street Foundation, 1.15 million properties across the state already face at least a 1% annual chance of flooding. However, FEMA maps identify just 860,000 at-risk properties, underscoring a major shortfall in flood risk mapping accuracy.
This discrepancy leaves many Texans unaware of their true exposure. Notably, more than half of all National Flood Insurance Program (NFIP) claims since 2005 have come from areas outside FEMA-designated high-risk zones.
Population Growth in High-Risk Zones
The Texas Water Development Board (TWDB) projects that by 2050, an additional 2.6 million people and 740,000 new buildings will be located in high-risk flood areas. Urban expansion and development trends are pushing more homes into vulnerable zones, often without corresponding insurance coverage or infrastructure improvements.
This rapid growth, combined with outdated FEMA flood maps, means newly built homes may not be subject to stricter building codes or insurance requirements, even though they face substantial risk.
Economic Impact and Insurance Shortfalls
Texas ranks second in the nation for NFIP claims, with over $11.6 billion paid on 150,000 claims in the past decade alone. Harris County is especially hard-hit, accounting for nearly 50% of NFIP payouts. Paradoxically, more than 78% of homes in the county remain uninsured.
Statewide, flood insurance coverage is alarmingly low:
- Just 7% of residential properties have flood insurance.
- In major inland metro areas like Dallas, Denton, and Bexar counties, coverage rates are below 1%.
- Even in FEMA-designated high-risk areas, only 28% of residential properties carry flood insurance.
The report also highlights affordability issues. Since FEMA introduced its Risk Rating 2.0 pricing model in 2021, premiums have risen by an average of 35%, while the number of insured buildings has dropped by 30%. In some counties, flood premiums consume up to 5% of household income.
Barriers to Resilience
Efforts to reduce flood risk through major infrastructure projects are underway, but funding gaps remain a significant hurdle. The TWDB has identified more than $54.5 billion in needed flood mitigation investments. However, just $10.6 billion in funding has been secured to date.
Meanwhile, many Texas homes remain structurally vulnerable. Nearly half of all active NFIP policies cover Pre-FIRM homes, which were built before the introduction of modern floodplain management standards and are more susceptible to flood damage.
The Path Forward
Matt Duffy, President of Neptune, stresses the need for expanded flood insurance access and improved public awareness. “Texas faces a clear and growing flood risk, yet millions of properties remain without adequate insurance coverage,” he said. With climate change accelerating the frequency and intensity of storms, and a busy 2025 hurricane season predicted, closing this protection gap is more critical than ever.
The report concludes that addressing Texas’s flood insurance crisis will require:
- Modernizing flood maps to reflect current and projected risk
- Increasing insurance affordability and access, particularly through private market solutions
- Investing in risk-reduction infrastructure
- Enhancing public education about flood risk beyond FEMA-defined zones
Texas is at a pivotal moment. Without concerted public and private sector efforts to address underinsurance and infrastructure shortcomings, the state’s vulnerability to flooding and the financial devastation it brings will only intensify.
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