Low NFIP take-up won't cover billions of dollars of US flash flood losses: Aon

By Navneeta Nandan

July 11 - (The Insurer) - The flash flooding that has affected counties across central Texas over the past week is expected to generate total economic losses reaching billions of U.S. dollars, Aon said on Friday.

The flooding was caused by the lingering effects of Tropical Storm Barry, said Aon's weekly cat report.

Colorado State University's Precipitation Systems Research Group said it marked a one-in-1,000-year rainfall event, with at least 120 fatalities making it one of the deadliest non-tropical cyclone flooding events seen in the U.S. since 1976.

Around 850 people were rescued from floodwaters across the central Texas, Aon said.

The downpour affected many countries and led to significant flooding along the Guadalupe River, surging its level to 26 feet (7.9 meters) in just 45 minutes.

The most affected counties in central Texas, including Kerr, Williamson, Burnet and Kendall, have low public flood insurance penetration, with National Flood Insurance Program take-up rates at or below 5% in these areas.

Research from The Insurer shows that across the six worst affected counties – Kerr County, Travis County, Burnet County, Kendall County, Williamson County and Tom Green County – the NFIP has more than $3.80 billion of exposure, as of May 31, 2025.

Guy Carpenter has also noted that despite the region being vulnerable to the flood peril, many of the affected counties lack insurance coverage under the program, as well as limited uptake of flood mitigation standards.

Aon said that although it will take a while to understand the full extent of the damage, considering the low NFIP take-up rates in the area, the event is not likely to be a major insured industry loss.

Elsewhere, New Mexico also experienced a significant flash flooding event on July 8 after stagnant thunderstorms along the Sierra Blanca mountain range resulted in heavy rainfall in nearby valleys.

Residual impacts from the South Fork Fire in June 2024 caused enhanced runoff, with the Rio Ruidoso gauge in Ruidoso’s Hollywood neighborhood setting a new record water level at that gauge station.

While the two events will not likely result in significant insured losses, substantial infrastructure damage across central Texas and New Mexico indicates that total economic losses may reach into billions.