In 2023, global insured losses from severe convective storms (SCS) totaled $64 billion, according to Swiss Re, with 85% of these losses occurring in the US. SCS losses are caused by straight-line winds, tornadoes, hail and severe thunderstorms.1

Halfway through 2024, there's been no letup in storms across the country. Two rounds of severe storms and tornadoes struck Kentucky, Indiana and Ohio in the first week of April, causing widespread flooding and devastation. In mid-April, an intense line of storms with heavy rain and tornadoes ripped through multiple states, including the Florida Panhandle, southern Georgia, the Ohio Valley and areas in New England. In New Orleans, streets became rivers from the intense rain. And, in Kirbyville, Texas, 15 to 17 inches of rain triggered a disaster declaration.

The Vital Importance of Flood Insurance

These and other storm events continually highlight the importance of Flood insurance. However, according to a 2023 Triple-I/Munich Re Consumer Survey, only 22% of homeowners reported being at flood risk.2 Of those, 78% purchased Flood insurance: 35% from a private insurance carrier and 43% through the National Flood Insurance Program (NFIP). When it comes to businesses, according to the NFIP, nearly 25% of businesses never reopen after disasters.3

Flood Insurance Options

Individuals and businesses can purchase Flood coverage through the NFIP. Up to $250,000 for the building and $100,000 for the contents is available for residential homes. On the commercial side, the program covers up to $500,000 for the building and $500,000 for contents. However, for many insureds, these limits are inadequate.

Higher-valued homes, for example, require additional limits, which the NFIP cannot provide. The limits provided by the federal program don't address today's construction costs and higher housing prices.

This is where the private market steps in.

"The private insurance market can provide additional limits excess of NFIP policies or replace the NFIP altogether and provide ground-up coverage with higher limits if it makes sense," says Nick Orf, RPS area assistant vice president — Flood. "We often provide the Excess limits that clients desire, as the NFIP rates are typically less expensive than private market options, especially in higher-risk areas.

"There are many options in the private market for Excess coverage, with the cost of coverage depending on the risk. Similar to the real estate market, it's location, location, location. As in general, the closer you are to a flooding risk, the higher the risk. We work with more than 30 private markets, each with their own appetite."

For example, homes in coastal areas like Florida or on a barrier island are more challenging to place for some carriers, while others will consider them, but at higher premiums.

Flood Insurance on the Commercial Side

Property Package policies typically provide all-risk coverage, often excluding Flood insurance, for commercial risks.

"However, many of the carriers that were able to include Flood coverage found that the exposure on these risks hasn't always been adequately rated. Therefore, many of those carriers are beginning to exclude Flood coverage as well," says Orf.

"Some carriers have taken big hits on losses and realize they must get a better handle on flood risks for rate adequacy, further exacerbated by the increase in storms and flooding across the country. As a result, we see more interest from businesses in purchasing separate, stand-alone Flood insurance."

The More Information, the Better

When going to the private market for insurance, Orf recommends providing as much information as possible about the risk.

"While some markets do not require an elevation certificate, providing one can help with underwriting and rating the risk. If you can show that a structure is above the base flood elevation with an elevation certificate or as-built survey or protected in some other way, such as being elevated or other mitigation practice, the carrier can better assess whether the risk falls within its appetite."

In addition, Orf recommends brokers review the limits their clients require, weigh the price differences, and determine how much risk they want to absorb.

Contributor Information


1Banerjee, Chandan et al. "sigma 01/2024: Natural catastrophes in 2023,", 26 Mar 2024.

2"Homeowners Perception of Weather Risks," Insurance Information Institute, accessed 28 May 2024. PDF file.

3"Why Businesses Need Flood Insurance," Agents.Floodsmart, Jan 2024.