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“For more than 50 years, the private insurance industry was unable to take on the flood peril, making the NFIP essential in reducing systemic risk. That is no longer the case,” Neptune Flood’s report suggested.<\/p>\nA new report from Neptune Flood has suggested that the National Flood Insurance Program (NFIP) continues to assume risks the private market is \u201cready and better equipped\u201d to handle, with roughly 95% of new policyholders eligible for private coverage.<\/p>\n
“For more than 50 years, the private insurance industry was unable to take on the flood peril, making the NFIP essential in reducing systemic risk. That is no longer the case,” Neptune Flood’s report suggested.<\/p>\n
According to the firm, the NFIP is now $22.525 billion in debt (less than $8 billion away from its $30.43 billion borrowing authority) and continues to add new financial risk to the federal balance sheet.<\/p>\n
“This debt level would have been even higher if Congress had not forgiven $16 billion in 2018. The NFIP continues to take on risks that the private market is ready and better prepared to manage,” Neptune Flood added.<\/p>\n
Outlining a potential path forward for the NFIP, Neptune Flood has argued that one decisive step would be to halt the sale of new NFIP policies.<\/p>\n
![\"Brit](\"http:\/\/www.xinetica.com\/wp-content\/uploads\/2025\/09\/brit-re-in-article-728x90-1.jpg\")
<\/a><\/div>\n<\/div>\nThe firm emphasised that the private flood insurance market already possesses the tools, technology, and capacity to effectively manage the risk that the NFIP continues to take on.<\/p>\n
“Unlike many legacy renewals, which are still capped on a glide path, new NFIP policies are charged the full Risk Rating 2.0 rate,” Neptune Flood said.<\/p>\n
As per the firm’s report, around 95% of new policyholders are eligible for coverage in the private market, and approximately 60% would pay less for comparable protection than they would under the NFIP.<\/p>\n
Neptune Flood estimated that between $550 million and $700 million in premiums could shift to the private market each year, with a full transition\u2014transferring 95% of NFIP policies to private insurers\u2014expected to take about six to seven years.<\/p>\n
An additional approach highlighted in the firm\u2019s report was to establish the NFIP as a narrow \u201clast resort\u201d option.<\/p>\n
Under this model, FEMA would reportedly maintain a tightly controlled fallback mechanism to ensure that even the hardest-to-insure properties could still obtain coverage, but only for applicants unable to secure private insurance.<\/p>\n
Neptune Flood continued, “This ensures NFIP functions strictly as a safety net of last resort, not as a competitor to private insurers. The safety net would be deliberately narrow (about 5% of potential new policies at most) and designed to be auditable to prevent abuse.<\/p>\n
“The federal government has unique capabilities to manage the most severely exposed properties, a role that would complement private carriers by addressing extreme residual risks in the public interest.<\/p>\n
“Importantly, every policy issued through this pathway would still be priced at a full-risk, actuarially sound premium under FEMA\u2019s Risk Rating 2.0 system. That means even these last-resort policies do not burden taxpayers with underpriced risk.”<\/p>\n
Neptune Flood concluded that ceasing the NFIP\u2019s sale of new policies, while maintaining renewals and a limited last-resort channel, would allow for an orderly transition over six to seven years.<\/p>\n
Current NFIP policyholders would remain fully protected, while homeowners nationwide would gain more options and stronger coverage.<\/p>\n
The firm added, “This approach requires no new legislation, only decisive administrative leadership. At a moment when federal budgets are strained and flood losses are accelerating, maintaining the status quo is too risky.<\/p>\n
“The private market is ready, the tools exist, and the blueprint is clear. Now is the time to act before the next major storm arrives to build a safer, more resilient system that effectively spreads risk, protects families, and ensures coverage is always available when Americans need it most.”<\/p>\n
The post Private flood market ready and better prepared to manage risks: Neptune Flood<\/a> appeared first on ReinsuranceNe.ws<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" A new report from Neptune Flood has suggested that the National Flood Insurance Program (NFIP) continues to assume risks the […]<\/p>\n","protected":false},"author":1,"featured_media":2725,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[14],"tags":[],"_links":{"self":[{"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/posts\/2723"}],"collection":[{"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/comments?post=2723"}],"version-history":[{"count":3,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/posts\/2723\/revisions"}],"predecessor-version":[{"id":2727,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/posts\/2723\/revisions\/2727"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/media\/2725"}],"wp:attachment":[{"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/media?parent=2723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/categories?post=2723"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.xinetica.com\/index.php\/wp-json\/wp\/v2\/tags?post=2723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}