The private flood insurance market: What we learned in 2021 and what we can expect in 2022

This year witnessed a wide spectrum of weather, spanning record-breaking hurricanes, intense freezes, catastrophic wildfires and disruptive atmospheric rivers. These extreme events continue to demonstrate the importance of preparation. In particular, Hurricane Ida reminded us that flooding can happen to anyone, anywhere, at any time. The Category 4 storm crushed the Louisiana coast on the 16th anniversary of Hurricane Katrina – the costliest storm in U.S. history – and days later, was still causing deadly inland flooding nearly a thousand miles away in the northeast.

Scientists say we’ll see more powerful tropical storms like Ida, underlining the need for more education. As these systems gain strength and persistence, the number of people impacted and the scale of that impact both increase proportionally. To combat that trend, we must work together to better educate people about the risk of flooding. We need to articulate risk in a way that’s easy to understand, so everyone can think about what they can do to help protect our communities, our homes and our livelihoods.

As I look ahead to next year, I predict two trends will emerge:

The private flood insurance market will continue its torrid growth trajectory. Part of this growth will be fueled by different capital markets responding to pricing changes from the National Flood Insurance Program’s (NFIP) new Risk Rating 2.0 initiative. I predict that activity will accelerate once Risk Rating 2.0 pricing begins to apply to NFIP renewals starting April 1.

Technology and innovation will continue to take center stage. The flood insurance industry will continue to innovate to better quantify flood risks and to better underwrite and price those risks. Over the past decade, technology has played a critical role in the evolution of this industry, and I expect to see additional advancements in 2022.

Agents – as we get ready for 2022, now is the perfect time to help your clients understand their true flood risk. For flood insurance to truly work, every stakeholder must participate in the conversation. Every homeowner and agent must be willing to talk about flooding. Greater understanding comes from more robust discussions, and those start with our insurance agent partners.