The 2025 State of Flood report examines the increasing demand for flood insurance across the United States, driven by a rise in flooding events, including in areas previously considered low risk.
Guy Carpenter’s analysis notes that extreme rainfall remains a primary cause of flooding globally, with rising temperatures contributing to increased flood risk. Factors such as higher evaporation rates, intensified tropical storms, and weather systems carrying greater moisture all contribute to flood events.
Periods of drought, which can reduce soil absorption, also heighten the risk of flash floods and mudflows when heavy rain falls on dry ground.
According to the report, pluvial flooding, resulting from heavy rainfall, has become increasingly frequent and severe, alongside flash floods and urban flooding. Many of these events occur outside traditional high-risk flood zones, adding to the unpredictability of flood events.
First Street projects that 1.7 million additional US properties in coastal and low-lying areas could face flood risk as environmental conditions evolve.
The United States experienced at least 166 flood-related fatalities across 24 states through November 2024, more than doubling the prior year’s figure and marking the highest flood-related death toll since 2015, according to the National Weather Service.
Throughout the year, there were 66 federal flood disaster declarations, the highest on record, according to The New York Times. In January, flash flooding impacted Southern California following record rainfall, while in September, Hurricanes Debby, Helene, and Milton produced severe flooding across the Southeastern U.S.
Guy Carpenter analysis notes that Hurricane Helene, which affected Florida, Georgia, the Carolinas, Tennessee, and Virginia, resulted in extensive inland flooding. In areas impacted by Helene, fewer than 1% of properties had flood insurance, according to National Flood Insurance Program (NFIP) data.
NFIP paid out more than 56,000 flood claims in 2024, totaling over $1.4 billion, with a significant portion linked to Hurricane Helene. In comparison, NFIP paid nearly 16,400 claims totaling $968 million in 2023.
Earlier this year, the Federal Emergency Management Agency (FEMA) notably finalized its 2025 traditional reinsurance placement for the NFIP, transferring US$757.835 million of the program’s financial risk to the private reinsurance market.
Early 2025 has already seen additional flood events, with California experiencing significant flooding from atmospheric rivers, particularly in wildfire-affected areas of Southern California. Pike County, Kentucky, also experienced severe flooding.
Guy Carpenter notes that La Niña conditions are expected to shift to neutral between March and May, though atmospheric patterns remain strong and could influence both precipitation and temperature trends. Guy Carpenter further highlights that these conditions underscore the need for communities to prepare for heightened flood risk, particularly in areas prone to intense rainfall following prolonged dry conditions.
NOAA projects that high-tide flooding will increase significantly in the coming decades as sea levels rise. High-tide flooding occurs when water overflows onto normally dry land due to tidal activity and does not require storm conditions to occur.
Underinsurance continues to present challenges in addressing flood risk. According to an analysis by the Federal Reserve Bank of Philadelphia, published in December 2024, approximately 70% of expected flood losses in the U.S. remain uninsured each year.
The analysis indicates that closing this gap will require property owners to better align their coverage with their actual flood exposure.
Guy Carpenter emphasizes that increasing flood insurance coverage is one component of broader flood resilience efforts. The firm notes that flood insurance solutions are part of a larger strategy to help individuals and communities become more resilient by enhancing their ability to absorb, recover from, and adapt to flood events.
As climate and development trends continue to drive increasing flood frequency and severity, Guy Carpenter sees closing the protection gap as a central focus for the insurance sector and policymakers alike.
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