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This is flood insurance that is both written and funded by private insurance companies. While private flood insurance only makes up a tiny fraction of the market, it’s become an increasingly popular — and occasionally cheaper — alternative to the NFIP.
Insurance companies no longer view flood insurance as an untouchable risk. Company models for determining the flood risk of each home are more sophisticated, and the third-party firms in charge of creating these models are getting better at predicting floods. This has incentivized more investment in private flood insurance, and as a result, companies are expanding and pouring more resources into new markets.
It’s important to note that FEMA is over $20 billion in debt. The unpredictability of the government program has both insurance policymakers and policyholders searching for another answer.