Flood has been considered an uninsurable risk for years. But the tide may be turning thanks to several recent developments. Congress passed a bill last spring that rolled back the more severe flood insurance premium increases, averting the possibility of a paralyzed real estate market in coastal Florida. And Florida simultaneously passed legislation that encourages the development of a private flood insurance market by allowing use-and-file for flood insurance until 2019. The advanced new catastrophe models available today can also help eliminate the asymmetric information that leads to adverse selection. As these trends continue, the flood insurance is likely to look considerably different five years from now.

This article was originally published in Best's Review.

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