Flood insurance protection gap widening in central Appalachia: Neptune

Catastrophic flooding in early 2025 has highlighted the growing flood risk across Kentucky, Tennessee, and West Virginia, however, flood insurance participation is rapidly declining from an already low base, leaving the region financially exposed, according to a recent analysis by Neptune Flood.

The central Appalachian states of Kentucky, Tennessee, and West Virginia have emerged as some of the most vulnerable areas in the U.S. to severe flooding, driven by intensifying rainfall, mountainous terrain, and aging infrastructure. More than 950,000 properties across the three states are now considered at substantial flood risk.

Over the past two decades, repeated disasters in the region have caused widespread devastation—claiming lives, destroying homes, and resulting in hundreds of millions of dollars in damages.

Most recently, two major flood events in February and April 2025 brought double-digit inches of rainfall to the region, causing multiple fatalities and prompting thousands of flood insurance claims filed with the National Flood Insurance Program (NFIP).

Despite the recurring disasters, flood insurance coverage in Kentucky, Tennessee, and West Virginia remains critically low.

FEMA’s NFIP data shows that only about 1% of residential structures across the three states are insured against flooding—well below the already modest national average of just over 3%—leaving millions of households financially exposed.

The coverage gap is particularly stark during major events. Following the Eastern Kentucky floods of July 2022, roughly 95% of damaged homes were uninsured.

The report notes that a major reason for low flood insurance uptake is premium increases under FEMA’s new Risk Rating 2.0 framework, among other contributing factors.

The report emphasises an urgent opportunity for private market solutions. Private flood insurers can offer flexible, actuarially sound products in underserved inland markets. With proper support, the private sector can help close the protection gap while easing the burden on public programs.

Neptune concluded in its report: “To protect the central Appalachian region from future disaster losses, stakeholders must act now. Expanding access to flood insurance — through modern modelling, improved communication, and competitive private options — is essential. This is not just a matter of resilience, but of equity and fiscal responsibility and a stronger, broader, and more affordable flood insurance ecosystem is both necessary and achievable.”

Trevor Burgess, CEO of Neptune, said, “Across the United States, millions of homes face rising flood risk, yet too many remain uninsured due to affordability challenges and outdated flood maps. Nowhere is this crisis more evident than in central Appalachia, where flood exposure is climbing, insurance participation is falling, and federal solutions are faltering. The private flood insurance market is here to help close the protection gap.”

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