FEMA slashes reinsurance cover for US flood programme NFIP at 1.1

The US emergency management agency FEMA bought $502.5 million in 2023 reinsurance coverage for its National Flood Insurance Program (NFIP) for a total of $90.2 million, a cut on prior year coverage.

The 2023 reinsurance placement covers portions of NFIP losses above $7 billion arising from a single flooding event, including 8.56% of losses between $7 billion and $9 billion and 16.56% of losses between $9 billion and $11 billion.

The purchase is roughly half the prior year programme. For 2022 FEMA had initially arranged $1.064 billion in coverage beginning at 4.2% of losses above $4 billion, 26.57% of losses to $8 billion and then 22.45% of losses to $10 billion. FEMA had paid a total premium of $171.9 million for the coverage.

Combined with the three capital markets reinsurance placements in 2020-22, FEMA has transferred nearly $1.93 billion of the NFIP’s flood risk to the private sector.

“FEMA remains committed to reinsurance as a risk transfer measure to ensure the NFIP has the capacity to pay claims, especially now with the growing intensity and frequency of weather patterns brought on by climate change,” FEMA’s senior executive of the NFIP David Maurstad said.

Guy Carpenter brokered on behalf of FEMA.

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