Increased flood vulnerability in Texas has revealed a widening insurance gap that threatens to increase the financial loss of future flood events, a new report from the Neptune Research Group has revealed.
Experts predict that over the next three decades, over 2.1 million properties will face flood exposure, and over 200,000 are expected to flood with near certainty, figures that highlight the critical l insurance shortfall.
According to the ‘Texas at Risk: Confronting the State’s Growing Flood Insurance Gap’ report, only 7% of residential properties state wide have flood insurance.
This figure plunges to less than 1% in major inland metropolitan areas like Dallas, Denton, and Bexar, despite these regions experiencing repeated flood events.
Even in high-risk zones designated by the Federal Emergency Management Agency (FEMA), only 28% of residential buildings have flood insurance coverage.
Following the 2021 launch of FEMA’s Risk Rating 2.0, a property-level flood insurance pricing model, Texas has experienced a 35% increase in average premiums alongside a 30% decrease in the number of insured buildings.
“Texas faces a clear and growing flood risk, yet millions of properties remain without adequate insurance coverage,” said Matt Duffy, President of Neptune. “This report underscores the scale of the challenge and the need to improve both awareness and
access to flood protection.”
The financial burden of this underinsurance is palpable, as Texas ranks second nationally in National Flood Insurance Program (NFIP) claims, with over 150,000 claims totalling $11.6 billion paid over the past ten years.
Harris County accounts for nearly 50% of all NFIP payouts state wide, yet over 78% of homes remain uninsured, the report notes.
There are several factors contributing to the issue, including outdated FEMA flood maps that fail to accurately reflect flood exposure, with only 860,000 properties identified as total at-risk, highlighting the mapping inadequacy.
Furthermore, federal flood insurance mandates are limited despite the scale of flood risk in the state.
Under current law, property owners are only required to purchase flood insurance if the building is located within a FEMA-designated Special Flood Hazard Area (SFHA), and if the building secures a federally backed mortgage.
This leaves millions of at-risk Texans unprotected, even if they live in flood-prone areas. Particularly concerning given that more than 52% of NFIP claims in Texas since 2005 have occurred outside of FEMA-designated flood zones.
The repost also warns of significant under insurance among those who do have policies. Recent research by the Federal Reserve Bank of Philadelphia found that 80% of at-risk households nationwide are underinsured, with an average annual shortfall of $7,208 per household.
This underinsurance persists both inside and outside FEMA-designated Special Flood Hazard Areas, analysts pointed out.
“Texas faces a defining challenge, one where the consequences of inaction are well-known and increasingly visible. The state remains dangerously unprotected despite repeated disasters, growing scientific consensus, and billions already spent on post-flood recovery,” the report stated.
“Millions of properties sit exposed, both outside and inside FEMA’s high-risk maps. What makes Texas’s flood risk especially urgent is its pace of change. Few states are growing faster, building more rapidly, or facing more extreme weather variability. Yet flood insurance coverage is moving in the opposite direction. Instead of expanding, it is shrinking both in reach and adequacy,” it added.
To close the protection gap and reduce vulnerability Neptune Research Group proposed a number of actions: invest in major infrastructure, modernise flood risk mapping, expand access to private flood insurance, improve affordability and enforcement, and build smarter for the future development.
The report concluded: “Texas has already taken important first steps with its state wide flood plan and growing public awareness of climate-related risk. What comes next is a combination of political will, policy design, and strategic investment. With better maps, better enforcement, a stronger role for the private market, and real infrastructure funding, the state can shift from reactive to resilient.”
