The US faces a widening gap between rising flood risk and low flood insurance take-up, leaving households and local governments exposed to major financial losses. A new Moody’s whitepaper estimates aggregated uninsured flood losses could exceed $375 bn in a 1-in-100-year flood event, according to Beinsure.
Moody’s said the flood insurance protection gap has reached 65%. The gap reflects the difference between economic losses from flooding and the share covered by insurance.
It creates financial pressure for homeowners, counties and public agencies when flood events hit properties outside insured areas.
The report said many households and local governments still rely on Federal Emergency Management Agency Special Flood Hazard Area maps to assess risk. Mortgage underwriters also use these maps to determine whether a property needs flood insurance.
Those maps mainly reflect riverine flood risk. They often do not capture losses linked to storm surge, sea level rise or extreme precipitation. That leaves counties exposed to flood damage outside mapped FEMA flood zones.
The National Flood Insurance Program remains the main source of residential flood cover in the US. Moody’s said private flood insurance accounts for about 10% of the market.
According to Beinsure, Moody’s found uninsured losses do not come from rare exceptions alone. They arise from persistent gaps between expanding flood hazards, regulatory flood maps, mortgage insurance requirements and actual insurance take-up.
The whitepaper used the Moody’s RMS US Inland Flood HD model to analyse residential flood risk across the country. It assessed a 1-in-100-year flood scenario and a more severe 1-in-500-year scenario.
A 1-in-100-year flood has a 1% annual probability. Under this scenario, Moody’s found most counties would face uninsured losses that remain manageable as a share of property replacement cost. Yet exposure is concentrated.
Less than 2% of counties across 11 states account for 65% of national uninsured flood loss exposure. Counties in Florida, Louisiana, South Carolina and Texas each face more than $5 bn in potential uninsured losses under a 1-in-100-year event. Their protection gaps range from 45% to 75%.
A 1-in-500-year flood scenario would create a larger financial shock. Moody’s estimated uninsured loss exposure could exceed $1 tn, with the protection gap rising to 70%.
The report also points to the limits of statistical flood assumptions. Flood events do not fit neatly into 1-in-100-year or 1-in-500-year categories, especially as rainfall patterns shift.
Asheville, North Carolina, recorded rainfall far above the expected level for a 1-in-1,000-year event when Hurricane Helene hit in September 2024. Buncombe County, where Asheville is located, had an 88% flood insurance protection gap, according to Moody’s RMS model.
Moody’s said the gap between severe flood events and low insurance take-up shows the limits of relying only on historical statistics to measure flood risk. This concern is sharper for short-duration, high-intensity rainfall, where changing hydroclimate conditions increase uncertainty for insurers, lenders and local governments.
