Harry Vardigans, director of insurance at Fathom, said the US flood insurance market offers a “profound opportunity” to reimagine existing flood risk products and innovate new flood risk products ahead of reinsurance renewals on July 1.
In a recent interview with Reinsurance News, Vardigans said a “new wave” of agile capacity providers and managing general agents (MGAs) have emerged, ready to capture market share with highly targeted flood products. This trend is clearly evidenced by data from Fitch Ratings, which shows that the private residential flood market is growing at a CAGR of 20%, while the National Flood Insurance Program (NFIP) shrank by -2% between 2020 and 2024. However, despite this momentum, only 4% of U.S. homeowners currently hold flood insurance, which represents a huge untapped area for the private market.
The executive said that for decades, the U.S. flood insurance market has been a patchy protection system that relied on traditional regulatory flood maps that often failed to keep up with highly complex, rapidly changing climate dynamics.
Vardigans describes this emerging group as “the democratization of risk in action”, arguing that access to high-precision flood data allows agile players to confidently underwrite complex risks that the wider market still views as uninsurable red zones.
“Risk is always a matter of perspective and changes based on the vantage point from which the risk is viewed,” Valdigens told Reinsurance News.
He added, “With around 70% of premiums in London linked to the US market, the ‘transatlantic’ view of climate risk looks fundamentally different to New York or Chicago. This difference, and the opportunities that come with it, is most evident in flood risk insurance.
“As the July 1 U.S. reinsurance renewal deadline approaches, we face significant opportunities to reimagine existing flood risk products and innovate new flood risk products.”
While peak hazards such as hurricanes and earthquakes in North America remain key items, the defining macroeconomic challenge and untapped business opportunity is the U.S. flood insurance market, Vardigans said.
Fathom’s insurance chief noted that this market inconsistency has inevitably forced a massive transfer of commercial portfolio and high-value residential risks into the hands of private access markets and excess and surplus (E&S) markets that seek to bridge the gap.
He added that despite tens of billions of dollars at stake, significant vulnerabilities remain, with many established and emerging U.S. insurers still underwriting multi-million dollar real estate portfolios using static regulatory flood maps that do not accurately reflect forward-looking climate conditions.
Vardigans explained that Hurricane Helene exposed the operational hazards of this blind spot, causing more than $78 billion in damage.
He continued, “While historically classified as a peak coastal wind event, Helen’s most severe damage was caused by a combination of unprecedented inland rainfall and runoff from North Carolina’s mountainous regions – areas where historical baselines and conventional models indicate negligible flood risk.
“With markets weak and capital providers weighing where restrictions are needed and where policy language can be relaxed, relying on legacy data lacking in climate change conditions seems like an extraordinary gamble.
“Even in years when the U.S. avoided a major hurricane landfall, underlying risk exposure remained completely unchanged – proving that the temporary absence of catastrophic headlines does not equate to a structural reduction in risk.
“NOAA data confirms that the United States suffered 28 weather disasters worth $1 billion in 2025, with severe convective storms alone causing more than $51 billion in damage.
“Reality is driving an industry-wide push to modernize data, with sophisticated climate models increasingly being integrated into traditional catastrophe frameworks to stress-test risks. Adopting such a precise approach is quickly becoming an operational necessity for underwriters looking to maintain long-term profitability.”
Against this backdrop, Vardigans highlights the strategic opportunities facing industry incumbents and market disruptors.
“A new vanguard has emerged consisting of hungry, agile capacity providers and general agents (MGAs) ready to capture market share by deploying highly specific flood products,” he said.
Vardigans added: “This represents a fundamental shift in market capabilities: high-precision data bridges the gap, allowing new capabilities to target profitable market spaces that have not been fully exploited by traditional frameworks.”
“With changing climate conditions, which will only be exacerbated by this year’s predicted Super El Niño, the differentiator will no longer be the size of the balance sheet, but the precision of the analysis.
“For professional underwriters, leveraging probabilistic models under climate conditions can provide a clear record of risk, whereas traditional frameworks only see uninsurable red zones.
“Conversely, for market giants looking to defend existing share, the very same data can serve as a defensive shield – providing leadership with insights into where to maintain structural discipline and where to provide pricing flexibility.”
Elsewhere in the interview, Valdigens also warned against confusing advances in specialized flood data with a broader and often undisciplined shift toward automation. He noted that while the industry as a whole is increasingly relying on generative AI, probabilistic modeling represents a unique discipline. He emphasized that high-fidelity data does not make decisions; It informs the human professionals who do so.
The executive concluded: “The core differentiator is how experienced underwriters choose to deploy high levels of risk intelligence. Whether an institution’s risk appetite is aggressive or conservative, the structural insights provided by the 50,000-year probabilistic event set fundamentally change the traditional underwriting equation.
“It transforms a guessing game into calculated portfolio optimization, allowing even junior teams to assess complex non-linear risks with confidence.
“Whenever a market cycle reaches a crossroads, the obstacle is rarely capital, but the friction of inertia and fear of the unknown.
“Overhauling traditional underwriting systems and changing businesses’ ‘views of risk’ will not be easy. However, the widening coverage gap in the U.S. and emerging markets is not an uncontrollable consequence of climate change. It is a failure of smart capital allocation driven by incomplete, inconsistent data fields.
“While updating an organization’s view of risk will always require overcoming inertia, the risks of not doing so are clear.
“As the market cycle reaches this crossroads, the ultimate advantage will not be limited to those with larger books, but rather teams with the analytical precision to drive more sophisticated approaches to meet current and future climate realities.”
