Moving the Needle on Closing the Flood Insurance Gap

February 13, 2018

Carolyn Kousky, Brett Lingle*, Howard Kunreuther, and Leonard Shabman

In October 2018, the Wharton Risk Center’s Policy Incubator hosted a workshop designed to evaluate policy options for expanding the number of people with flood insurance in the United States, particularly those of low and moderate income. The workshop brought together roughly 50 experts across sectors and disciplines, including representatives from FEMA, the (re)insurance industry, lending institutions, state departments of insurance, non-profit organizations, and research institutions.

Participants agreed that the impact of many policies considered to date may be marginal, perhaps only slightly increasing the number with flood coverage. However, participants also identified a number of ideas that would involve larger, structural changes that they believed could help substantially increase the number of households with flood insurance. In a new issue brief, we present seven approaches that workshop participants felt had the potential to generate more substantial increases in take-up rates across the country. These include:

  1. a flood insurance “opt-out”
  2. a mandatory offer
  3. a federal backstop or reinsurance for flood
  4. community policies
  5. insuretech to make purchase simple
  6. escrowing monthly premiums and automatic renewal
  7. a voucher program for low- and moderate-income households

All of these approaches would need further exploration and refinement before adoption.

For more details, see the full Issue Brief available here: Moving the Needle on Closing the Flood Insurance Gap.

*At the time of posting Brett Lingle was a Policy Analyst and Project Manager with the Wharton Risk Center.