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New flood insurance study highlights a ‘massive disconnect’

Mark Parker



Hurricane Idalia's eyewall remained hundreds of miles offshore as the storm passed by the area in August. Flooding still inundated low-lying neighborhoods like St. Petersburg's Shore Acres. Photo: St. Pete Fire Rescue.

A recently released report found that over 73% of homeowners falsely believe they have flood insurance; it also showed widely varying risk perceptions among age groups.

St. Petersburg-based Neptune Flood, the nation’s largest private flood insurance provider, has announced the results of its fourth annual Consumer Survey of Flood Awareness. The University of South Florida St. Petersburg’s Customer Experience Lab completed the study.

The 90-page report details evolving attitudes regarding climate change and flood risks. Neptune CEO Trevor Burgess said his most significant takeaway is “how confused Americans are about the insurance they have.”

“Three-quarters of Americans believe that they have flood insurance on their primary residence,” Burgess told the Catalyst. “The real number is something less than 5%. You have this massive disconnect …”

The study found that many people believe their mandated homeowner’s insurance also covers flooding. Burgess noted that the U.S. Treasury-backed National Flood Insurance Program (NFIP) was the only provider – or educational source – for over five decades.

Neptune began providing a private alternative six years ago, and Burgess stressed the importance of informing consumers. He said the company’s agents start every new conversation by explaining that homeowner’s policies lack flood protection.

“Until there was a private alternative, nobody was asking agents to do anything different than just follow the law,” Burgess said.

Trevor Burgess, CEO of Neptune Flood. Photo provided.

While the study encompassed Florida, addresses are unknown to protect anonymity. However, Burgess said about 25% of Pinellas County homeowners have flood insurance.

He said that is slightly higher than the national average but does not correlate with the increased local threat. “Hello, we’re a peninsula on a peninsula,” Burgess added. “Every single house should have flood insurance.”

Dr. Phillip Trocchia, director of USFSP’s Customer Experience Lab, designed and conducted the national study. Qualtrics software eliminated unqualified participants and data.

Nearly two-thirds of respondents believe their flood risk has increased. Just 8% think it has declined.

The study found that respondents aged 18 to 34 are more than twice as likely to believe they will experience a flood in the next five years than their older counterparts. In addition, 48% of those 50 and over do not view flooding as a significant risk.

“The next generation understands that climate change is real – it affects our environment and makes the risk of flooding go up,” Burgess said. “That tells me that the stories in the media and, unfortunately, all these super storms we’ve been having … are doing the unfortunate job of educating people about the risk.”

In addition, Burgess said many older homeowners have already paid off their mortgages. Even those who live along the coast are no longer required to carry flood insurance.

He said an underestimated risk combined with no statutory requirements “puts that older demographic into a much more vulnerable position.”

Burgess said the NFIP has had little success educating homeowners over the past 50 years. He believes the nation’s 125,000 insurance agents can help close the knowledge gaps if they go beyond only selling flood protection where required by law.

Burgess said 25% of all flood losses occur outside of high-risk areas. He noted that in 2017, Hurricane Harvey inundated 200,000 homes around Houston, Texas – about 50 miles inland.

In 2019, Burgess said Neptune’s initial study found “a bigger problem than we thought.” He said the now annual surveys help inform the company’s messaging.

Trocchia, in a prepared statement, said nearly 87% of consumers listed flood threats as a significant factor when purchasing a home. Burgess added that “it definitely has an impact on affordability.”

He said the NFIP recently stopped subsidizing insurance rates. For example, Burgess said his $500 payment on a waterfront property would soar to $12,000 under the new methodology.

However, he believes the exponential increase ultimately benefits residents. Burgess said the subsidies encouraged home building in areas “that maybe we shouldn’t have built in.”

“So, I think that will change,” he added. “If you drive around St. Pete and look at the houses under construction, especially on the water, you’ll see they’re 16 feet up in the air. And the house next door can be on a slab.”





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