FEMA Renews $1.3 Billion Reinsurance Program with 28 Carriers
The Federal Emergency Management Agency (FEMA) has renewed for the third year a reinsurance program that transfers future catastrophic flood insurance losses to the private sector
The 2019 traditional reinsurance placement for the National Flood Insurance Program (NFIP) transferred $1.32 billion of the NFIP’s financial risk to the private reinsurance market. This reinsurance agreement is effective from January 1, 2019 to January 1, 2020, with 28 private reinsurance companies.
Combined with the $500 million August 2018 capital markets reinsurance placement, FEMA has transferred $1.82 billion of the NFIP’s flood risk for the 2019 hurricane season to the private sector.
As a result of the transfers, if a named storm flood event is large enough to trigger both reinsurance agreements (i.e., a named storm flood event where NFIP claims exceed $5 billion), FEMA would receive payments under both reinsurance agreements.
“It takes an entire community to prepare for disasters, and that includes participation from the private sector. Through reinsurance, FEMA partners with private markets to build a pillar that supports a sound financial framework for the NFIP by a meaningful transfer of flood risk,” said David Maurstad, chief executive of the NFIP.
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