Just 4% of US households buy flood insurance today, generating an estimated $4b of premium annually. The untapped opportunity in flood insurance however is massive. Milliman, in a recent report on the state of flood insurance in the US, estimates a total addressable opportunity in flood insurance of $37-$47b. With Hurricane Ida driving $10b of uninsured flood losses, it's not hard to believe this estimate.
Insurers now have the tools and capital to underwrite flood risk but distribution remains a significant challenge. Homeowners in Special Flood Hazard Areas (SFHAs) with federally-backed mortgages have to buy flood insurance. For better or worse, they'll fight through a high-friction NFIP process or find the rare insurance agent with access to a private flood product. For homeowners outside of SFHAs, the friction to buy flood insurance often kills the sale. While Milliman rightly points out that factors like perceived risk, homeowner demographics, and location can improve take rates for voluntary flood insurance, this tends to be a rounding error on the broader $40b opportunity.
At Annex, our perspective is that building a modern, friction-less digital sales channel is critical to unlocking the opportunity in flood insurance. Annex is empowering insurance agents to sell more flood insurance by making it easy to comparison shop flood providers, bundle flood with a homeowners policy, and checkout digitally. By building this digital sales channel, Annex is working to bridge the gap from today's $4b market to tomorrow's $40b market.