The Watermark - National Flood Insurance Program Financial Statements

The Watermark is a quarterly report that provides transparency on the financial state of the National Flood Insurance Program (NFIP). This report provides information about the NFIP to interested groups and individuals, such as policyholders, industry partners and government officials.

Download the Latest Watermark - First Quarter FY2021

Current as of December 31, 2020

The Office of the Flood Insurance Advocate (OFIA) embarked on a video production project to help NFIP customers with frequently misunderstood concepts. Existing material targeting insurance agents, adjusters, Write Your Own stakeholders or other technical audiences require an advanced level of familiarity with NFIP concepts. Confusion around certain flood insurance terminology was identified through OFIA’s casework and research. OFIA is seeking to address these common issues with straightforward and informative videos.

For the last four years, the Federal Insurance Directorate (FID) has approached policyholder claim appeals through the lens of the customer experience work started in 2017. During this time, the team recruited and trained talented staff, implemented iterative improvements to the appeals process, and used data to inform future areas of concern and opportunity. With a fully-staffed appeals branch to start 2021, we continue to refine our process and software to generate more efficient interactions with Write Your Own companies and policyholders. 

The NFIP’s Available Resources provides information similar to a “Balance Sheet” used in the private sector. It is a snapshot of the program’s finances, including any prior period carryover for the given period.

AVAILABLE RESOURCES ($ in Thousands)	Sept. 30, 2020	Dec. 31, 2020
Flood Fund Balance	5,870,295	5,769,587
Unpaid Obligations	(698,057)	(804,945)
Unpaid Loss & Loss Adjustment (Claims)	(707,677)	(549,823)
Mandatory Sequestration	(90,093)	(88,806)
Flood Fund Available Resources	4,374,468	4,326,012
Reserve Fund Balance	531,138	770,709
Net Investments	1,579,834	1,513,828
Outstanding Obligations	(275,590)	(186,009)
Reserve Fund Available Resources	1,835,382	2,098,528
Remaining Borrowing Authority	9,900,000	9,900,000
NFIP Total Capacity to Pay Claims *	16,109,850	16,324,541

* FEMA’s reinsurance placements augment the NFIP’s Available Resources. After qualifying losses for a single event exceed $4B, the NFIP may collect up to $2.53B should the event reach $10B in losses.

REVENUE	FY 2019	FY 2020	FY 2021 Q1
Premium	3,386,176	3,510,140	663,536
Reinsurance	0	0	0
Federal Policy Fee	193,114	191,199	40,185
Other Revenue	9,039	10,213	2,764
Total Flood Fund Revenue	3,588,329	3,711,552	706,485

EXPENSES	FY 2019	FY 2020	FY 2021 Q1
Total Loss & Loss Adjustment (Claims)	1,884,347	1,447,313	503,860
Unpaid Loss & Loss Adjustment (Claims)*	1,351,335	(670,576)	(211,784)
Commissions	64,575	57,662	11,962
Write Your Own (WYO) Expense Allowance	913,995	901,715	194,288
Interest Paid on Debt	415,341	438,412	111,925
Floodplain Management & Mapping Activities	147,204	174,295	43,329
Flood Related Grant Activities	90,354	121,291	33,183
Other Expenses	496,613	266,833	76,565
Total Flood Fund Expenses	5,363,764	2,736,945	763,328
FLOOD FUND NET INCOME (LOSS)**	(1,775,435)	974,607	(56,843)

REVENUE	FY 2019	FY 2020	FY 2021 Q1
Assessment	503,585	583,703	175,916
Surcharge	361,596	338,458	89,003
Return on Investment	17,453	13,743	1,093
Total Reserve Fund Revenue	882,634	935,904	266,012

EXPENSES	FY 2019	FY 2020	FY 2021 Q1
Total Loss & Loss Adjustment (Claims)	0	0	0
Reinsurance-Traditional	185,880	153,924	51,308
Reinsurance-ILS	80,260	131,781	38,273
Obligated But Not Expended	27,074	73,624	(89,581)
Total Reserve Fund Expenses	293,214	359,329	0
RESERVE FUND NET INCOME (LOSS)	589,420	576,575	266,012

* In FY 2019, a new Federal Accounting Standard, Statement of Federal Financial Accounting Standards (SFFAS) 51 was issued that made changes to how claims are reported. SFFAS 51 gives guidance that claims must be reported at the time of occurrence. Unpaid Claims in this Watermark report show claims pursuant to SFFAS 51 and have been separated from Total Loss & Loss Adjustment. Unpaid claims include projections of claims reported, and projections of claims Incurred But Not Reported (IBNR), which is an estimate of claims not yet reported to insurance companies.

** The combination of Total Revenue and Total Expenses contribute to the Net Income or Net Losses for the NFIP. Because of the NFIP’s current structure of premium discounts, interest expenses on debt, and loss concentrations, Net Losses are anticipated.

View Previous Watermark Reports