U.S. counties face uninsured flood losses that could top $1 trillion, Moody’s says

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U.S. counties face uninsured flood losses

Highlights

Moody’s Ratings estimates U.S. counties face $375 billion in uninsured residential flood losses in a 1-in-100-year scenario, with a 65% insurance protection gap.
A 1-in-500-year flood event could push uninsured losses above $1 trillion, raising the protection gap to over 70% and stretching exposure to inland counties.
Moody's warns expanding flood risk, persistent insurance gaps, and variable county shock absorption create significant credit risks for state and local governments.

County-level flood exposure scenarios

As reported by Moody’s Ratings, residential flood exposure is becoming a significant credit risk for U.S. state and local governments through higher property insurance costs, weaker property values and the need for more investment in climate-resilient infrastructure.

The ratings firm says its nationwide analysis uses the Moody’s RMS U.S. Inland Flood HD model to measure potential uninsured residential losses at county level under three scenarios: a 1-in-100-year flood, a 1-in-500-year flood, and a 1-in-100-year flood under an intermediate-emissions scenario by 2050. It says the exercise is intended to provide a forward-looking view of risk exposure as the flood footprint expands.

In the 1-in-100-year scenario, U.S. counties face aggregate uninsured loss exposure of $375 billion and a 65% insurance protection gap. In the rarer 1-in-500-year event, uninsured loss exposure could triple to more than $1 trillion, with the protection gap rising above 70%.

Credit implications for states and local governments

Moody’s says the report points to a structural mismatch between expanding flood risk and insurance protection, with uninsured losses driven not by isolated anomalies but by persistent gaps in coverage, especially outside regulatory flood maps that guide mortgage insurance requirements and during more severe events.

As flood exposure widens across scenarios, the concentration of potentially high uninsured losses extends beyond coastal counties with moderate to high physical climate risk into additional inland states, including some with lower climate risk exposure. While a relatively small number of counties account for a disproportionate share of large uninsured losses, most counties still face some level of flood exposure and substantial protection gaps.

The report says credit effects will depend not only on the scale of uninsured losses but also on each county’s capacity to absorb shocks through federal disaster aid, state and local resources, liquidity, revenue, insured loss proceeds and governance strength. FEMA is also cited in the report’s source data.

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