Flood Insurance


The current situation

Flood risk continues to be one of the most difficult perils to price for the homeowners insurance industry, and until recently many have considered it to be uninsurable. As a result, flood insurance in the U.S. has traditionally been offered primarily through the National Flood Insurance Program (NFIP), operated under the auspices of the Federal Emergency Management Agency (FEMA), and a few private insurers. However, recent legislation -coupled with improved flood risk modeling, reinsurance and insurance market capacity, and consumer demand -is making the possibility of a private flood insurance market more viable.

Flood creates more losses than any other natural catastrophe peril, but is one of the least insured perils. Uninsured flood losses have exceeded those covered by insurance in many recent flood events.

Flood risk varies over short distances, and a successful risk classification plan needs to accurately price this risk. Milliman is one of the first companies to develop sophisticated flood insurance solutions and has extensive experience addressing the challenges inherent in this work.

What we do

Milliman is at the forefront of innovation in flood insurance.

  • Concurrent with the recent developments in flood insurance modeling and data availability, our consultants have developed independent flood rating and underwriting structures for private insurers.
  • We are recognized global experts in property insurance ratemaking, with specialists to help insurers measure and manage the unique risks associated with catastrophe-exposed property risk.
  • We employ competitive analysis to support pricing and profitability decisions, and sales and marketing strategies.
  • Our experts are experienced in assessing and navigating the regulatory landscape. For admitted carriers, the ability to underwrite and price flood insurance profitably is dependent on state regulation, which varies widely across the US.
  • We can assist with the implementation of catastrophic rating plans. We can create manuals and GIS layers, and assist with IT issues that may arise.
  • Our team has performed in-depth statutory research and feasibility studies for insurers and reinsurers considering entering the flood insurance market.
  • We have extensively reviewed storm surge catastrophe models and inland flood models, and have developed a variety of approaches to the area of flood insurance rate structures.
  • Our consultants are recognized as thought leaders in flood insurance, and have presented on catastrophic risk rating and flood rating at numerous industry conferences. We are currently providing actuarial consulting services as part of a program to redesign flood insurance products across the NFIP.

Our tools

Bungalow: Prebuilt, customizable flood insurance solution

Milliman Bungalow is a complete, modern rating solution for insurers to quickly and cost-effectively build a profitable flood business.

Key features:

  • Matches price to risk at the highest resolution in the industry
  • Powered by the KatRisk SpatialKat flood models
  • Flexible, low cost options for start-up and growing companies to avoid development and regulatory costs
  • Designed for easy customization, Milliman’s experienced flood and GIS experts can tailor Bungalow to your needs

PinPoint: Prebuilt geospatial solution

Milliman’s PinPoint delivers relevant geographic rating insights to your system at the point of decision through a simple API.

Key features:

  • Granularity and unique data drives more accurate rates
  • Returns geographic insights customized to your rates and rules
  • Milliman geographic and actuarial experts ready to tailor and support


Pixel™ is a web-based, interactive premium comparison platform that helps companies quickly understand their rating positions and make informed decisions. The software incorporates:

  • Market baskets (see below) or company-specific data, such as quotes
  • Competitor premiums and modeled losses at the risk level
  • Geospatial information and maps
  • Data exploration and visualization
  • Advanced analytics

Test sensitivity of key metrics to assumptions

Example: Win Rate by Permissible Loss Ratio

Flood pricing structures

NFIP clone
Risk-level modeling
Grid rating plan
Refined rating plan

Market Baskets

To reduce time and data required to enter the flood arena, Milliman has developed market baskets. These are portfolios of hypothetical risks with realistic distributions of characteristics used for property and flood insurance pricing. They include:

  • Data on realistic properties with location-level specificity
  • Critical risk factors based on advanced geospatial measurements
  • Competitor premiums and catastrophe model losses for selected states/products

Relative elevation measures whether a point is higher or lower than the surrounding area

Rating engine

Milliman develops and maintains rating engines to calculate premiums of many existing flood programs, including the NFIP. Further, we have extensive competitive data on homeowners premiums, which can be used to assess the premium increase to policyholders of adding a flood endorsement.

Premium Rank can be used to estimate the competitiveness of a new program against likely competitors, as shown below.


Related Milliman flood insurance services

Climate resilience consulting

Property analytics

Press Releases

Recent press


Flood: It’s not just a coastal problem;(Leader’s Edge, October 1, 2019)

Almost 2 Million Homes Are at Risk From Dorian. Most Lack Flood Insurance. (New York Times, September 6, 2019)

The Ridgecrest Earthquake: Will Recent Quakes Shake Up California's Insurance market? (Insurance Journal, August 5, 2019)

Waiting to Erupt (Best’s Review, June 2019)

Milliman's Rollins: Localized Flood Data Opens Coverage to Tens of Millions (AM Best TV, May 15, 2019)

Major flooding in the South is a cautionary tale for all homeowners (MarketWatch, May 13, 2019)

Wall Street Is Masking the True Cost of Climate Change for Coastal Homes (Bloomberg, March 26,2019)

U.S. Flood Models Are Still in Their Infancy, So Underwriters Must Be ‘Cautious Consumers’ (Carrier Management, July 1, 2018)

Milliman to design NFIP rating plan (Business Insurance, November 15, 2017)

Work on national flood insurance bill continues (WRKF.org, August 2, 2017)

Editorial: Storm clouds over flood insurance fixes (Tampa Bay Times, July 21, 2017)

Private insurers ready to plunge into flood market (Insurance Journal, July 2017)

Private market flood insurance is cheaper in many cases (Terms + Conditions, July 13, 2017)

Study: Private flood coverage could slash costs for many in Louisiana, but some could see prices double (The Advocate, July 13, 2017)

The private flood insurance market is stirring after more than 50 years of dormancy (Forbes, August 2016)

Remember the flood insurance scare of 2013? It's creeping back into Tampa Bay and Florida (Tampa Bay Times, August 5, 2016)

Practice Leaders

Connect with Milliman experts

Watkins Nancy

Nancy Watkins

Principal, Consulting Actuary

Nancy Watkins is a principal and consulting actuary with the Property and Casualty Practice in Milliman’s San Francisco office. She manages an actuarial consulting practice that specializes in climate resilience, insurtech, and c...

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