ST. PETERSBURG, Fla. (August 10, 2020) - A national survey of flood risk awareness conducted by the University of South Florida Institute for Data Analytics and Visualization and Neptune Flood finds that consumers significantly underestimate their risk level of flooding, leading many to forego flood insurance.
The inaugural Neptune Consumer Survey of Flood Awareness surveyed more than 1,000 residents in 36 states such as Florida, California, Illinois, Texas and New Jersey to measure perceptions of flood risk and insurance.
Around 63 percent of total respondents said they have no to low risk of flooding. In Florida, of the 188 people who responded, 65 percent believed they were at no to low risk of flooding.
However, a 2019 study by Verisk, a leading data analytics provider, found that 62 million homes representing more than 50 percent of U.S. households are at moderate to extreme risk of a flooding event.
"The survey highlights a significant underestimation of flood risk despite years of climate change-driven extreme flooding throughout the country," said Jim Albert, chairman and founder of Neptune Flood, an artificial intelligence-driven flood insurance company. "The recurring tragedy of uninsured homeowners suffering permanent losses from flood events will take a concerted effort from both the government and the insurance industry to solve the large flood insurance coverage gap."
Many respondents perceived flood insurance as too expensive to buy or keep. About 45 percent of those who don't have flood insurance elected not to purchase it for financial reasons - either because they thought the price was too high or they felt they were not be able to afford it. Others responded that they did not carry flood insurance because they did not know the cost or it was not something they wanted to think about.
According to industry estimates, the average flood insurance policy sold in 2019 was approximately $708 for the year.
"This survey on flood risk awareness in the nation highlights the challenge of consumer adoption of an important, but mostly non-mandatory, product,” said Phil Trocchia, professor of marketing at USF’s St. Petersburg campus who designed and conducted the survey. “The data indicate that the low level of demand for flood insurance is largely driven by misunderstanding of risk, lack of knowledge of cost, and confusion around private versus government flood insurance."
Other major findings from the national survey included:
- People over the age of 55 were less likely to believe their home would be flooded compared to homeowners younger than 55. Overall, the older someone was, the less likely they were to perceive a risk from flooding.
- More than half of respondents believed their flood insurance came from a private company, when in fact nearly 90 percent of homeowners’ flood insurance comes from FEMA’s National Flood Insurance Program.
- Mandatory purchase requirements are effective measures in ensuring flood insurance uptake. Nearly 30 percent were unsure or would not renew their policy if coverage was not mandatory.
The results provide a potential roadmap for the industry and government to work together to address issues around flood risk and flood insurance coverage across the U.S.
“These findings can help bolster educational campaigns and public service announcements - focused on knowing your zone and reducing losses to homes and property – with the goal of enhancing public awareness on both the risk of flooding and value of flood insurance in coastal areas,” said Trocchia.
For the full survey results, visit https://neptuneflood.com.
The University of South Florida
The University of South Florida is a high-impact global research university dedicated to student success. Over the past 10 years, no other public university in the country has risen faster in U.S. News and World Report’s national university rankings than USF. Serving more than 50,000 students on campuses in Tampa, St. Petersburg and Sarasota-Manatee, USF is designated as a Preeminent State Research University by the Florida Board of Governors, placing it in the most elite category among the state’s 12 public universities. USF has earned widespread national recognition for its success graduating under-represented minority and limited-income students at rates equal to or higher than white and higher income students. USF is a member of the American Athletic Conference. Learn more at www.usf.edu
Neptune Flood was founded in 2017 by insurance and technology industry veterans, including Chairman, Jim Albert, with a goal of bringing advanced analytics and extreme ease of use to the flood insurance market. Neptune Flood's policies are currently backed by some of the largest and most secure reinsurers in the world, rated "A" (Excellent) by AM Best. In January 2018, Neptune raised over $2mm in seed financing led by C1 Bank founder and former CEO Trevor Burgess who now serves as Neptune's President & CEO. Neptune filed for a patent on its revolutionary Artificial Intelligence engine in November 2019.