Flood Insurance Market Expected to Reach $50 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Flood Insurance Market, By Coverage (Building Property Coverage and Personal Contents Coverage), By Application (Residential and Commercial): Global Opportunity Analysis and Industry Forecast, 2022-2032”. The flood insurance market was valued at $12 billion in 2022, and is estimated to reach $50 billion by 2032, growing at a CAGR of 15.6% from 2023 to 2032.

Flood insurance is a type of property insurance that covers an insurer’s house and belongings for flood-related damages. Floods are caused by various factors, such as heavy rain, melting snow, storm surges, or levee failure. Flood insurance is different from a homeowners insurance policy, which usually does not cover flood damage. The Federal Emergency Management Agency (FEMA) determines an area’s flood risk.

Furthermore, in April 2022, insurtech start-up, Joe Flood Insurance Brokerage (JFIB) launched its tech-based flood insurance wholesale brokerage. JFIP also announced its status as a cover holder of Chubb European Group with the launch of its own proprietary product on Chubb paper, Upstream. Upstream writes all lines of proprietary and excess flood business on A++ Chubb paper. Thus, such factors drive the growth of the flood insurance market.

The rise in the frequency and severity of floods is one of the primary drivers of the flood insurance market. This is due to various factors such as climate change, which leads to more rain & stronger storms and cause a lot of damage to homes & businesses. Hence, more people have adopted flood insurance to protect themselves from the financial burden of flood-related damage.

Furthermore, rise in awareness and education regarding flood insurance policy and private market flood accelerates the flood insurance market growth. However, one of the significant factors hindering the growth of the flood insurance market is the high premium costs of flood insurance policies. Moreover, lack of awareness and misconceptions about flood risks and coverage limits the growth of the flood insurance market. On the contrary, one of the major flood insurance market trends includes an increase in urbanization & infrastructure development in many regions. Moreover, climate change & extreme weather events are expected to provide lucrative growth opportunities to the flood insurance market in the upcoming years.

By coverage, the building property coverage segment acquired a major share in 2022. This is attributed to the increase in frequency and severity of floods due to factors such as climate change that have made property owners more aware of the need for protection. Furthermore, regulations and mortgage requirements in flood-prone areas often mandate building property coverage, pushing more people to purchase this insurance.

However, the personal contents coverage segment is the fastest-growing segment during the forecast period. This is attributed to the rise in recognition among the people about the value of their belongings and the desire to protect them from flood damage. As floods become more frequent and severe due to climate change, individuals have realized the importance of safeguarding their personal items such as furniture, electronics, and clothing, which have led to better productivity and growth of the market.

Region-wise, North America dominated the market in 2022. This is attributed to a rise in concern about the increase in frequency and severity of floods in the region. However, Asia-Pacific is considered to be the fastest-growing region during the forecast period. This is attributed to the increase in awareness of flood risks.

The COVID-19 had a significant impact on the flood insurance market size. The pandemic increased awareness about the importance of insurance coverage for unexpected events such as floods. Many people realized that they needed protection not only from health emergencies but also from natural disasters. This led to more people getting interested in flood insurance industry, causing a rise in policy purchases. However, the economic uncertainty caused by the pandemic strained the finances of both individuals and governments which made it challenging for people to afford flood insurance premiums.     

Key Findings of the Study

• On the basis of coverage, the building property coverage segment accounted for the highest flood insurance market share, in terms of revenue in 2022.
• On the basis of application, the commercial segment attained the highest market share in 2022.
• On the basis of region, North America generated the highest revenue in 2022.  

The key players operating in the flood insurance market analysis include GEICO, USAA, Neptune Flood, Allstate Insurance Company, Tokio Marine Highland Insurance Services, Inc., Berkshire Hathaway, Progressive Casualty Insurance Company, AXA, Chubb, and Assurant, Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the flood insurance industry.