An assessment written by Jennifer Chang, senior vice president of sustainable finance credit at Moody’s Ratings, and Firas Saleh, director of North American flood modeling, assessed residential flood risk across the United States and found a large gap between insured and uninsured losses at the county level under different flood scenarios.
Moody’s ratings indicate that flood risk is becoming a growing credit concern for U.S. state and local governments due to more frequent and severe weather events, continued development in affected areas, and relatively low levels of insurance coverage.
Moody’s Ratings uses the Moody’s RMS US Inland Flood HD model to assess potential uninsured losses through 2050 under a 100-year flood scenario, a more severe 500-year event, and a 100-year flood scenario under a moderate discharge pathway.
The analysis assumes insurance coverage and flood protection remain unchanged, meaning the results reflect existing structural risks rather than expected realized losses.
It compares the replacement value of residential properties affected by flooding to the replacement value of residential properties covered by the National Flood Insurance Program, which covers river, surface water and coastal flooding, and identifies where uninsured risk is most concentrated.
Moody’s found an ongoing mismatch between expanding flood risks and insurance coverage. The potential loss to uninsured residences under a 100-year event is estimated to be approximately $375 billion, with an overall coverage gap of 65%.
While most counties in the United States are at some risk, most counties face relatively small potential uninsured losses of $150 million or less, with higher concentrations of more than $5 billion occurring primarily in Florida, Louisiana, South Carolina, and Texas. About 90% of counties have some degree of flood risk, but the scale of losses varies widely.
Moody’s estimates that in a 1-in-500-year scenario, uninsured losses could exceed $1 trillion, with coverage gaps exceeding 70% and high-loss counties expanding into 11 additional states beyond traditional coastal hotspots. Under the 2050 medium emissions scenario, uninsured losses would increase by approximately 25% to approximately $472 billion, with high-risk exposures further expanding geographically to include New Jersey.
Moody’s also highlighted that severe rainfall events in recent years have shown that actual flooding may exceed historical expectations and cause uninsured losses even in areas that do not typically present high flood risk.
While coverage gap percentages indicate vulnerability, the report emphasizes that the fiscal impact ultimately depends on the sheer scale of losses and the ability of counties and states to absorb the shock through federal support, reserves, insurance spending and governance frameworks.
Overall, Moody’s Ratings concludes that flood risk is widespread but unevenly insured across the United States, leaving many local governments exposed to significant potential uninsured losses that could increase fiscal pressures unless addressed through increased insurance use or enhanced resilience investments.
