Insurers will soon have better analytical tools for predicting the damages caused by widespread inland floods in the U.S., allowing them to price this risk more accurately and, eventually, transfer more of this risk to private investors through insurance-linked securities. 

Currently the U.S. government subsidizes residential policies through the National Flood Insurance Program (NFIP). Since the prices of these policies inadequately reflect flood risk, there is not much incentive for private insurers to compete. Private insurers’ commercial policies typically cover damages for a range of natural perils including flood. 

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