FEMA Secures $1.32B in NFIP Reinsurance
The Federal Emergency Management Agency (FEMA) has purchased $1.32 billion in reinsurance to transfer risk from the National Flood Insurance Program (NFIP) to the private market. The reinsurance placement covers qualifying losses during the 2019 calendar year.
Under the agreement, 28 reinsurance carriers indemnify FEMA for losses from individual flood events, instead of aggregate losses from multiple flood events. FEMA has paid $186 million in total premium for the $1.32 billion coverage, which has decreased compared with 2018’s $1.46 billion in reinsurance.
In the event of a disaster, the agreement covers 14 percent of losses between $4 billion-$6 billion, 25.6 percent of losses between $6 billion-$8 billion, and 26.6 percent of losses between $8 billion-$10 billion.
2019 marks the third year that FEMA has procured reinsurance coverage, which was granted by Congress through the Biggert-Waters Flood Insurance Act of 2012 and the Homeowners Flood Insurance Affordability Act of 2014. With reinsurance, FEMA is able to build a stronger foundation against future loss and ensure payment of claims in the event of a flood disaster.