A week after Hurricane Debby drenched the East Coast, data from Neptune Flood shows that in-force flood insurance policies along the Eastern Seaboard are declining. Meanwhile, thousands more people are moving in rather than out of fire- and flood-prone areas, according to a new report from real estate company Redfin that used U.S. Census data.

Florida has seen the most significant population increase in high-risk counties. Despite this, the number of flood insurance policies in Florida remains low. Only 12% of the state's 8.97 million properties have flood insurance, with a modest 1.2% increase in coverage from June 2023 to June 2024, according to Neptune Flood. This brings the total number of policies to 1,089,386, up from 1,076,596 the previous year.

However, the situation is more concerning in other states along the East Coast. Georgia, for instance, saw a 3.7% decrease in flood insurance policies, with only 1.6% of its 4.2 million properties covered. South Carolina experienced a 3.1% decrease, leaving just 6.5% of its 2.1 million properties insured against floods. North Carolina also saw a decline, with a 2.5% drop in policies, covering only 2.6% of its 4.3 million properties.

Further north, states like Pennsylvania, New York, New Jersey and Connecticut have also seen reductions in flood insurance coverage. Pennsylvania saw a 3.9% decrease in policies, leaving only 0.7% of its 5.5 million properties insured. New York and New Jersey experienced declines of 1.3% and 2.2%, respectively, with coverage rates of 1.7% and 3.8%. Connecticut reported a 1.1% decrease, with only 1.6% of its properties covered.

“The number of flood insurance policies nationwide is declining for two primary reasons," explained Trevor Burgess, CEO of Neptune Flood. “First, the NFIP's new pricing structure eliminates subsidies for new policies and gradually phases them out for grandfathered renewal policies. Faced with annual price increases of up to 18%, many consumers are opting to drop non-mandatory coverage."

“Second, over the past decade, a large number of Americans have purchased their homes with cash," Burgess said. “These buyers are not required to buy flood insurance, even if they live in high-risk zones, because they don't have a mortgage."

Despite these declining policy numbers, high-risk counties, particularly in Texas and Florida, continue to attract new residents. In 2023, 16,144 more people moved into America's high-flood-risk counties than out, with over half of these moves occurring in Florida.

Further, five high-flood-risk counties in Texas had net inflows of more than 2,000 people in 2023. All are just outside of Houston, which last month grappled with flooding and power outages due to Hurricane Beryl.

“For a lot of Americans, things like cost of living and proximity to family take precedence over catastrophe risk, which can feel less immediate and more abstract," said Elijah de la Campa, senior economist at Redfin.

“Florida and Texas, the two states with the highest net inbound migration, both offer low taxes and abundant sunshine, but also feature long, hurricane-prone coastlines," Burgess agrees.

Insurers and reinsurers' losses from Hurricane Debby are expected to be in the low single-digit billions of dollars, according to Reuters. This figure would be "very manageable" for the industry, according to a report from Gallagher Re.

Wind and water-related losses could cost insurers between $1 billion to $2 billion. Fewer active insurance policies were partly why the losses would be so low, Gallagher Re's report said.

“There is a real opportunity for independent agents to help counter the decline in flood insurance coverage by consistently discussing flood insurance with home and business owners," Burgess adds. “Many consumers don't realize that they need to purchase a separate flood insurance policy, and some are unaware that private flood insurers can often save them money or provide better protection with higher limits or optional coverages not available through the NFIP."

Will Jones is IA editor-in-chief.