Climate change and competition drive global flood insurance market

The global commercial flood insurance market was valued at $8bn in 2023 and is estimated to reach $30bn by 2033, according to Allied Market Research (AMR). It said the market is experiencing growth due to several factors such as the increasing flood events and severity of floods, along with the growing government programmes and management to improve floodplain management.

It said another prime determinant of growth is an increasing number of insurance markets. “However, the high premium costs of commercial flood insurance policies, along with the lack of awareness and misconceptions about flood risks, hinder market growth to some extent,” said AMR. It noted that the global commercial flood insurance market is expected to grow at a compound annual growth rate of 14.1% from 2024 to 2033.

It added: “Moreover, the increasing urbanisation and infrastructure development across developing countries, along with technological enhancements in improving the accuracy of flood hazards offer remunerative opportunities for the expansion of the global commercial flood insurance market.”

The building coverage segment is expected to grow faster throughout the forecast period, said AMR. Based on the coverage type segment, building coverage held the highest market share in 2023, accounting for more than two-fifths of the global commercial flood insurance market revenue throughout the forecast period (2024-2032).

“The demand for building coverage is driven by unpredictable weather patterns, and the frequency of extreme weather events, such as hurricanes and heavy rains, have heightened awareness of flood risks. This leads businesses to seek comprehensive coverage, including building coverage, to safeguard their operations, which drives market growth,” said AMR.

Based on the policy provider segment, the National Flood Insurance Program (NFIP) segment held the highest market share in 2023, accounting for nearly three-fifths of the global commercial flood insurance market revenue. Allied Market Research said this growth can be attributed to the fact that the NFIP provides subsidised rates that can be more affordable than private insurance, making it an attractive option for many businesses.

“Its availability and standardised pricing structure are major factors in its market presence, which drives market growth. Moreover, economic conditions, such as property values and business continuity concerns, drive flood insurance demand. As businesses invest in protecting their assets, the NFIP remains a viable option,” said AMR.

Based on region, North America held the highest market share in terms of revenue in 2023, accounting for nearly two-fifths of the global commercial flood insurance market revenue, according to AMR. It added: “The rising occurrence of floods due to climate change and the large presence of commercial flood insurance providers are expected to drive the growth of the commercial flood insurance market. In addition, the growing initiatives involving public-private partnerships are promoting the development of more comprehensive flood insurance products, which are expected to boost market growth.”