Recent Research Insights on Flood Insurance, Risk Mapping, and Policy Implications (2023–2025)A growing body of research from 2023 to 2025 rei...
Published on by Hossein Ataei Far, Deputy Manager of the Research, Technology Development, and Industry Relations Center at NWWEC
A growing body of research from 2023 to 2025 reinforces the strategic importance of aligning flood insurance policies with accurate, property-specific risk information—particularly in light of climate change and evolving flood patterns.
1. Improved Risk Mapping and Uptake Beyond FEMA Zones
Goldsmith-Pinkham, Guren, and Nolte (2023) demonstrate that enhanced flood risk mapping significantly increases insurance demand, even among properties outside the traditional 100-year FEMA floodplain. By aligning premiums and coverage decisions with true risk rather than outdated zone designations, policymakers can improve household resilience and create a more equitable distribution of flood protection benefits (Weill, 2023).
2. Risk Rating 2.0 and Property-Specific Pricing
Evidence from Mulder and Kousky (2023) on FEMA’s Risk Rating 2.0 shows a substantial re-pricing of premiums to reflect property-level risk, with many increases occurring outside FEMA’s mapped zones. This narrowing of the premium gap between high- and low-risk properties is expected to better target subsidies to genuinely high-risk households and reduce adverse selection in the National Flood Insurance Program (Mulder & Kousky, 2023).
3. Participation Gaps and Federal Cost Savings
The Congressional Budget Office (2024) highlights the low penetration of NFIP coverage in many high-risk areas. The analysis underscores that increasing policy uptake can reduce post-disaster federal outlays and speed community recovery—supporting the “insurance over aid” approach as a more cost-effective and timely solution to disaster recovery financing (CBO, 2024).
4. Rising Pluvial Flood Risks and the Protection Gap
Choi (2025) presents new evidence from Nature Climate Change showing that pluvial (rainfall-driven) flooding is causing increasing economic losses, especially outside conventional riverine and coastal flood zones. These findings emphasize that many “out-of-zone” households remain vulnerable and could benefit significantly from flood insurance coverage (Choi, 2025).
5. Flood Insurance: Protect Your Home
Flooding is the most common natural disaster in the U.S., yet most homeowners and renters lack coverage. The National Flood Insurance Program (NFIP) provides protection for homes and belongings, with policies typically taking 30 days to take effect. Standard insurance usually does not cover flood damage.
Flood risk extends beyond coasts and rivers. Nearly all U.S. counties (98%) have experienced flooding, but fewer than 4% of households have NFIP coverage. About 40% of claims come from outside high-risk flood zones, showing that being outside a Special Flood Hazard Area does not guarantee safety.
FEMA offers an online portal for flood risk information, quotes, and provider contacts.
Policy Implications
Collectively, these studies reveal a consistent message: the combination of precise risk mapping, actuarially sound pricing, and increased participation in flood insurance can enhance resilience, reduce inequities, and protect federal budgets. With climate change expanding both the geographic and economic footprint of flood hazards, closing the flood insurance protection gap is no longer optional—it is a necessary component of national disaster preparedness and climate adaptation strategy.
References:
[1] Weill, J. A. (2023). Flood Risk Mapping and the Distributional Impacts of Climate Information. Federal Reserve Board, Washington, D.C.
[2] Mulder, P., & Kousky, C. (2023). Risk Rating without Information Provision. AEA Papers and Proceedings, 113, 299–303.
[3] Congressional Budget Office (CBO). (2024). Flood Insurance in Communities at Risk of Flooding.
[4] Choi, J. (2025). Closing the Flood Insurance Protection Gap. Nature Climate Change.
[5] FEMA, (2025), Floods Can Happen Anywhere—Be Prepared with Flood Insurance.
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