Wharton Report - Potential for Private Flood Insurance Market in Texas

The Wharton Risk Management and Decision Processes Center has released a study analyzing the role private insurance companies could play in offering residential flood insurance.

In the U.S., residential flood insurance is provided mainly by the National Flood Insurance Program (NFIP), established in 1968. However, with the program now facing many challenges, the government has recently proposed the privatization of flood insurance.

Using probabilistic catastrophe flood modeling provided by CoreLogic®, the Wharton Risk Center analyzes the potential cost of providing private flood insurance in a pilot study focusing on two flood-prone counties in Texas. The study finds that prices charged by private insurers could potentially be lower than current prices charged by the NFIP in some parts of those counties. It also highlights the effectiveness and cost of mitigation, and quantifies the cost and benefit of flood risk reduction measures.

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