The National Flood Insurance Program (NFIP) Reinsurance Program helps FEMA manage the future exposure of the NFIP through the transfer of risk to private reinsurance companies and capital markets investors. The NFIP Reinsurance Program promotes private sector participation in flood-risk management. By securing reinsurance at a fair and reasonable cost, FEMA now has an additional way to fund payment of flood claims after catastrophic flood events.
Congress granted FEMA authority to secure reinsurance from the private reinsurance and capital markets through the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA). The January 2017 reinsurance placement marked a key step towards achieving a stronger and more resilient NFIP, and set the foundation for a multi-year strategy that promotes private sector participation in flood-risk management. FEMA is committed to growing the NFIP Reinsurance Program to protect against future flood losses.
Summary of the August 2018 Reinsurance Placement Engaging the Capital Markets
To complement the NFIP’s existing traditional reinsurance coverage, FEMA recently completed an additional reinsurance placement through a transaction that, for the first time, engages the capital markets. FEMA entered into a three-year reinsurance agreement, effective August 1, 2018, with Hannover Re (Ireland) Designated Activity Company (DAC), a reinsurance company. Hannover Re acted as a “transformer,” transferring $500 million of the NFIP’s financial risk to capital markets investors by sponsoring issuance of a catastrophe bond through a special purpose reinsurer.
Under the August 2018 reinsurance agreement, Hannover Re will indemnify FEMA for a portion of flood claims that result from a qualifying flood event that occurs between the dates of August 1, 2018 and July 31, 2021. The agreement is structured to cover, for a given flood event, 3.5 percent of losses between $5 billion and $10 billion, and 13 percent of losses between $7.5 billion and $10 billion. FEMA will pay $62 million in premium for the first year of coverage.
Combined with the January 2018 reinsurance placement, FEMA has transferred $1.96 billion of the NFIP’s flood risk for the 2018 hurricane season to the private sector. If a catastrophic flood event triggers the reinsurance placements, the NFIP will have an additional way to fund payment of flood claims. The August 2018 placement is also significant because, for the first time, capital markets investors are directly backing NFIP reinsurance coverage. By engaging both the traditional reinsurance markets and the capital markets, the NFIP can reduce risk transfer costs, access greater market capacity, and further diversify its risk transfer partners.
For the August 2018 placement, FEMA contracted with Guy Carpenter and GC Securities, a division of MMC Securities LLC, which is a subsidiary of Marsh & McLennan Companies, to serve as structuring agent and with Aon Benfield for financial advisory services. GC Securities and Aon Securities Inc. served as bookrunners, marketing the catastrophe bond to capital markets investors. KatRisk LLC, a catastrophe modeler, analyzed NFIP risk for investors.
Congress granted FEMA authority to secure reinsurance from the private reinsurance and capital markets through the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA).
Summary of the January 2018 Traditional Reinsurance Placement
As of January 1, 2018, FEMA has paid over $7.6 billion in losses to policyholders as a result of Hurricane Harvey. Because FEMA purchased reinsurance for calendar year 2017, FEMA recovered $1.042 billion from the private markets.
For 2018, continuing this risk management practice, FEMA secured $1.46 billion in reinsurance to cover any qualifying flood losses occurring in calendar year 2018.
Under the 2018 Reinsurance Agreement, 28 reinsurance companies agreed to indemnify FEMA for flood losses from individual flood events (as opposed to aggregate losses from multiple flood events). The agreement is structured to cover, for a given flood event, 18.6 percent of losses between $4 billion and $6 billion, and 54.3 percent of losses between $6 billion and $8 billion. FEMA paid a total premium of $235 million for the coverage.
FEMA contracted with Guy Carpenter and Company, a subsidiary of Marsh & McLennan Companies, to provide broker services to assist in securing the reinsurance placement. FEMA contracted with Aon Benfield for financial advisory services for the January 2018 placement of reinsurance.
The 28 private reinsurance markets under FEMA’s 2018 Reinsurance Agreement are:
Allied World Insurance Company
Amlin (Lloyd’s Synd. No. 2001 AML)
Apollo (Lloyd’s Synd. No. 1969 APL)
Ariel (Lloyd’s Synd. No. 1910 ARE)
Ascot (Lloyd’s Synd. No. 1414 ASC)
AXIS Reinsurance Co US
Brit (Lloyd’s Synd. No. 2987 BRT)
Canopius (Lloyd’s Synd. No. 4444 CNP)
Chaucer (Lloyd’s Synd. No. 1084 CSL)
Faraday (Lloyd’s Synd. No. 0435 FDY)
General Reinsurance Corporation
Hannover Ruck SE
Hiscox (Lloyd’s Synd. No. 0033 HIS)
Liberty Mutual Insurance Company
Lloyd’s Syndicate 4472 Liberty Specialty Markets
Managing Agency Partners (Lloyd’s Synd. No. 2791 MAP)
Markel Global Reins Co
Munich Reinsurance America, Inc.
QBE Reinsurance Corporation, Renaissance (Lloyd’s Synd. No. 1458 RNR)
Renaissance Reinsurance U.S. Inc.
SCOR Reinsurance Company
Swiss Re Underwriters Agency, Inc. o/b/o Swiss Reinsurance America Corporation
The Cincinnati Insurance Co
Transatlantic Reinsurance Company
Validus Reinsurance (Switzerland) Ltd.
XL Catlin (Lloyd’s Synd. No. 2003 XLC)
XL Reinsurance America, Inc.
These reinsurers represent some of the largest insurance and reinsurance companies around the globe.
Summary of the 2017 Traditional Reinsurance Placement
In January 2017, FEMA made a cornerstone placement of reinsurance for the 2017 calendar year, transferring $1.042 billion of the NFIP’s financial risk to 25 reinsurers through January 1, 2018. FEMA contracted with Guy Carpenter and Company, a subsidiary of Marsh & McLennan Companies, to provide broker services to assist in securing the reinsurance placement.
When FEMA signed the 2017 reinsurance agreement with 25 private reinsurance markets, this laid the cornerstone for a multi-year strategy to diversify the tools FEMA uses to manage the financial consequences of major flood risk.
The 25 private reinsurance markets under FEMA’s 2017 Reinsurance Agreement were:
Axis Reinsurance Company U.S., Everest Reinsurance Company, General Reinsurance Company, Hannover Ruck SE, Liberty Mutual Insurance Company, Lloyd’s Syndicate 2001 Amlin, Lloyd’s Syndicate 1414 Ascot, Lloyd’s Syndicate 2987 Brit, Lloyd’s Syndicate 435 Faraday, Lloyd’s Syndicate 033 Hiscox, Lloyd’s Syndicate 4472 Liberty Specialty Markets, Lloyd’s Syndicate 1458 RenaissanceRe, Lloyd’s Syndicate 4444 Sompo Canopius, Lloyd’s Syndicate 2003 XL Catlin, Market Global Reinsurance Company, Munich Reinsurance America Inc., National Indemnity (U.S.), Partner Reinsurance Company of the U.S., QBE Reinsurance Corporation, Renaissance Reinsurance U.S. Inc., SCOR Reinsurance Company, Swiss Reinsurance America Corporation, Transatlantic Reinsurance Company, Validus Reinsurance (Switzerland) Ltd., and XL Reinsurance America Inc.
These reinsurers represent some of the largest insurance and reinsurance companies around the globe.
As of May 31, 2018, FEMA has paid NFIP policyholders over $8.6 billion for claims resulting from Hurricane Harvey. Therefore, FEMA recovered the entire $1.042 billion in reinsurance as of December 15, 2017.
Public Notice Of The FEMA Intended Procurement of Reinsurance for NFIP
Public Notice of FEMA's Intended Procurement of Reinsurance for the NFIP
AGENCY: FEDERAL EMERGENCY MANAGEMENT AGENCY, U.S. DEPARTEMENT OF HOMELAND SECURITY
ACTION: NOTICE ANNOUNCING INTENDED PROCURMENT OF REINSURANCE FOR THE NATIONAL FLOOD INSURANCE PROGRAM AS REQUIRED UNDER THE AGREEMENT ON GOVERNMENT PROCUREMENT (MAR. 30, 2012).
The Federal Emergency Management Agency (“FEMA”) will be procuring reinsurance for the National Flood Insurance Program (“NFIP”) to be effective on or about January 1, 2019. To participate in the reinsurance procurement, vendors must submit a request to participate by November 19, 2018, and final tenders by November 29, 2018.
FOR FURTHER INFORMATON CONTACT: FEMA’s Reinsurance Broker, Guy Carpenter and Company, at FEMA.GC@guycarp.com or a FEMA representative at FEMA-NFIP-REINSURANCE@fema.dhs.gov.
Pursuant to the World Trade Organization (“WTO”), Agreement on Government Procurement (“GPA”), as amended on March 30, 2012, FEMA, the procuring entity, is hereby providing notice of its intended procurement of reinsurance for the NFIP. For more information, refer to Art. VII of the GPA, Exhibit A. FEMA is not securing reinsurance through the Federal Acquisition Regulations (“FAR”) and reinsurers will not be considered Federal contractors.
FEMA provides Notice on the following:
a. The name and address of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement, and their cost and terms of payment, if any;
FEMA intends to procure reinsurance for flood risk in the United States insured by the NFIP. Guy Carpenter and Company is FEMA’s broker and will act as the third-party intermediary for the intended procurement of reinsurance referenced in this notice. Contact Guy Carpenter at FEMA.GC@guycarp.com for any information and relevant documentation relating to the procurement.
In addition, you may contact a representative of FEMA regarding this procurement at FEMA-NFIP-REINSURANCE@fema.dhs.gov.
b. A description of the procurement, including the nature and the quantity of the goods or services to be procured or, where the quantity is not known, the estimated quantity;
FEMA intends to procure reinsurance on or about January 1, 2019, to be effective for one or more years. The procurement of reinsurance will be an agreement of indemnity between FEMA and private reinsurance firms. FEMA will pay a reinsurance premium to transfer a portion of the NFIP’s flood-risk to the counterparties (reinsurers). The reinsurers will be responsible for the payment of potential NFIP losses as defined by the reinsurance agreement. The amount of reinsurance and the design of the reinsurance program will remain undisclosed until determined otherwise by FEMA.
c. For recurring contracts, an estimate, if possible, of the timing of subsequent notices of intended procurement;
This provision is not applicable to this reinsurance procurement.
d. A description of any options;
This provision is not applicable to this reinsurance procurement.
e. The time-frame for delivery of goods or services or the duration of the contract;
The duration of the reinsurance treaty will be one or more years to begin on or about January 1, 2019.
f. The procurement method that will be used and whether it will involve negotiation or electronic auction;
FEMA intends to procure reinsurance by following standard reinsurance industry practices, including soliciting quotes from a select group of reinsurers known as a quoting panel. From the quotes provided and subject to further negotiations, FEMA will determine Firm Order Terms and disseminate the terms via email to all reinsurers who meet the minimum criteria listed below in Section (j) interested in participating in the FEMA reinsurance program. This reinsurance procurement will not be available through Federal Business Opportunities, because FEMA will secure reinsurance outside the FAR.
g. Where applicable, the address and any final date for the submission of requests for participation in the procurement;
The final date for the submission of request for participation will be November 29, 2018. Refer to Section (a) for contact information.
h. The address and the final date for the submission of tenders;
The final date for the submission of tenders is November 29, 2018. Refer to Section (a) for contact information.
i. The language or languages in which tenders or requests for participation may be submitted, if they may be submitted in a language other than an official language of the Party of the procuring entity;
The notice and intended procurement will be in English (United States).
j. A list and brief description of any conditions for participation of suppliers, including any requirements for specific documents or certifications to be provided by suppliers in connection therewith, unless such requirements are included in tender documentation that is made available to all interested suppliers at the same time as the notice of intended procurement;
Below is a list and brief description of conditions for participation of reinsurers:
I. Evaluating Criteria:
A. Ability to write property catastrophic excess of loss reinsurance in the United States;
B. Fulfillment of minimum financial requirements measured by an:
(a) A.M. Best rating of A- or better,
(b) For Underwriting Members of Lloyd’s, Lloyd’s market rating of A- or better,
(c) S&P rating of BBB+ or better, and
(d) Policyholder Surplus of at least $350 million;
C. Satisfactory outcome of appropriate financial analyses (e.g., measurements of liquidity, leverage, capital adequacy); and
D. Payment of taxes pursuant to country or jurisdiction in which the reinsurance company operates.
II. Conditions and restrictions:
A. Office of Foreign Assets Control
Except as authorized by the Office of Foreign Assets Control (OFAC) in the Department of the Treasury, potential reinsurance companies shall not acquire, for use in the performance of the intended NFIP reinsurance treaty, any supplies or services if any proclamation, Executive Order, or statute administered by OFAC, or if OFAC’s implementing regulations at 31 CFR Chapter V, would prohibit such a transaction by a person subject to the jurisdiction of the United States.
Lists of entities and individuals subject to economic sanctions are included in OFAC’s List of Specially Designated Nationals and Blocked Persons at http://www.treas.gov/offices/enforcement/ofac/sdn. More information about these restrictions, as well as updates, is available in the OFAC’s regulations at 31 CFR Chapter V and/or on OFAC’s website at http://www.treas.gov/offices/enforcement/ofac.
D. Prohibition on Inverted Domestic Corporations
FEMA will not secure reinsurance from reinsurance companies that are inverted domestic corporation or a subsidiary of an inverted domestic corporation as defined in 6 U.S.C. § 395(b)-(c).
E. Delinquent Tax liability or a Felony Conviction under Federal Law
FEMA will not secure reinsurance from reinsurance companies that have unpaid U.S. Federal tax liability, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability.
FEMA will not secure reinsurance from a reinsurance company where the entity has been convicted of a felony criminal violation under any Federal law in the preceding twenty four (24) months.
F. Other Tax Matters
Pursuant to section 523 of Division B of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235), and similar provisions, if contained in subsequent appropriations act, FEMA will not secure reinsurance from reinsurance companies that have:
• Not filed all Federal tax returns required during the three years preceding the certifications,
• Been convicted of a criminal offense under the Internal Revenue Code of 1986, and
• More than 90 days prior, been notified of any unpaid Federal tax assessment for which the liability remains unsatisfied, unless the assessment is subject to an installment agreement or offer in compromise that has been approved by the Internal Revenue Service and is not in default, or the assessment is the subject of a non-frivolous administrative or judicial proceeding.
G. Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements
Pursuant to section 743 of Division E, Title VII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), FEMA will not secure reinsurance from reinsurance companies that require employees or subcontractors seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a Federal department or agency authorized to receive such information. This prohibition does not contravene requirements applicable to Standard Form 312 (Classified Information Nondisclosure Agreement), Form 4414 (Sensitive Compartmented Information Nondisclosure Agreement), or any other form issued by a Federal department or agency governing the nondisclosure of classified information.
III. Trade Agreement Act of 1979 and WTO GPA Conditions
A. Pursuant to the Trade Agreements Act of 1979 (TAA), 19 U.S.C. § 2501) and the WTO GPA, FEMA will only secure reinsurance from reinsurance companies that meet the following criteria:
• The potential reinsurance company must be established in a country approved as TAA-eligible. A list of TAA designated countries may be found at http://gsa.federalschedules.com/resources/taa-designated-countries/. This list may be amended from time to time or be superseded by international agreements or events. The country in which a potential reinsurance company is “established” means the country in which it is incorporated and maintains its principal place of business or headquarters.
• The potential reinsurance company must perform the following tasks for the performance under such reinsurance agreement entirely within a TAA-eligible country:
o underwriting, including any decisions and activities necessary to making the underwriting decision concerning the reinsurance (including for example, if applicable, modeling, pricing, quoting, and review of the terms and conditions of the Agreement);
o accept and execute the Agreement;
o accept payment of premiums from FEMA under the Agreement;
o administer the reinsurance agreement; and
o adjudicate and pay claims under the Agreement.
• Potential reinsurance companies will be evaluated on an ongoing basis during the term of such reinsurance agreement for their compliance with the conditions for participation under the standards set forth in the GPA and other TAA-Related Requirements.
• A potential reinsurance company may be disqualified and excluded from participation if any of the following occur at any time prior to or while an entity has responsibilities under such reinsurance agreement:
o false declarations;
o significant or persistent deficiencies in performance of any substantive requirement or obligation under a prior reinsurance-related contract or contracts;
o final judgments in respect of serious crimes or other serious offenses;
o professional misconduct or acts or omissions that adversely reflect on the commercial integrity of the entity;
o failure to pay taxes; or
o violation of or failure to comply with any TAA-related requirements or any other laws or regulations applicable either to such a reinsurance agreement or to the potential reinsurance company.
k. Where, pursuant to Article IX, a procuring entity intends to select a limited number of qualified suppliers to be invited to tender, the criteria that will be used to select them and, where applicable, any limitation on the number of suppliers that will be permitted to tender.
If more than the required number of reinsurers meeting the minimum requirements described in Section (j), subscribe to the FEMA’s Firm Order Terms, then FEMA may give preference to reinsurers with:
A. Strong financial metrics as measured by A.M. Best ratings, S&P ratings, Lloyd’s market ratings (as applicable), Policyholder Surplus and financial ratio tests;
B. Strong investment and/or history in flood reinsurance;
C. Expertise in reinsurance flood underwriting; and
D. Consistency in price and capacity between quoting and final terms offered.
E. Amount of capacity offered and overall support of NFIP reinsurance placements.
l. An indication that the procurement is covered by this Agreement.
Reinsurance is a service covered by the WTO GPA.
END OF NOTICE
NFIP Reinsurance Program FAQs
Q: What is reinsurance?
A: Reinsurance is an important risk management tool used by insurance companies to protect themselves from large financial losses. In other words, reinsurance is insurance for insurance companies. Insurance providers pay premiums to reinsurers. In exchange, reinsurers provide coverage for losses incurred by insurance providers up to a specified amount that is negotiated by both parties. Similar to insurance for your home, reinsurance acts as a safety net by transferring risk to another party.
There are many different types of reinsurance. The NFIP secured “catastrophe property excess of loss” reinsurance. Similar to a homeowner’s insurance policy, the reinsurance company reimburses an insurer for a share of losses above an agreed-upon deductible. Reinsurance serves an important function as protection against losses from a natural disaster or other catastrophe.
Private insurance companies around the world commonly use reinsurance as a tool to manage risk. Public entities also secure reinsurance. Several U.S states operate insurance providers that utilize reinsurance, including Florida (the Citizens Property Insurance Corporation of Florida), California (the California Earthquake Authority), and Texas (the Texas Windstorm Insurance Association).
Q: What is FEMA’s National Flood Insurance Program (NFIP) Reinsurance Program?
A: The NFIP Reinsurance Program helps FEMA manage the future exposure of the NFIP through the transfer of risk to private reinsurance companies and capital markets investors. With the impacts of several large flood disasters over the past years, the NFIP experienced situations where the cost of NFIP claims far exceeded premium revenues and accumulated surplus. This resulted in the NFIP incurring debt to the U.S. Treasury.
Through the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, Congress granted FEMA authority to secure reinsurance from the private reinsurance and capital markets. In response, FEMA created the NFIP Reinsurance Program to better prepare financially for potential losses from significant flooding events similar to Hurricanes Harvey, Katrina and Sandy.
In 2017, the NFIP Reinsurance Program:
- Secured traditional reinsurance in January 2017 at a fair and reasonable cost, providing an additional way to fund payment of flood claims following catastrophic flood events;
- Laid the cornerstone for a multi-year program; and
- Promoted private sector participation in flood-risk management.
Q: What reinsurance did FEMA buy for the NFIP in 2018?
A: In January 2018, FEMA secured $1.46 billion in traditional reinsurance coverage from 28 reinsurance companies. FEMA paid $235 million in reinsurance premium for the coverage, effective January 1, 2018 to January 1, 2019. The agreement is structured to cover, for a given flood event, 18.6 percent of losses between $4 billion and $6 billion, and 54.3 percent of losses between $6 billion and $8 billion.
FEMA entered into a three-year reinsurance agreement, effective August 1, 2018, with Hannover Re (Ireland) Designated Activity Company (DAC), a reinsurance company. Hannover Re acted as a “transformer,” transferring $500 million of the NFIP’s financial risk to capital markets investors by sponsoring issuance of a catastrophe bond through a special purpose reinsurer.
The placement is structured to cover, for a given flood event, 3.5 percent of losses between $5 billion and $10 billion, and 13 percent of losses between $7.5 billion and $10 billion. FEMA will pay $62 million in reinsurance premium for the first year of coverage.
Q: What reinsurance did FEMA buy for the NFIP in 2017?
A: In 2017, FEMA secured $1.042 in traditional reinsurance coverage from 25 reinsurance companies. FEMA paid $150 million in reinsurance premium for the coverage, effective January 1, 2017 to January 1, 2018. The agreement was structured to cover, for a given flood event, 26 percent of losses between $4 billion and $8 billion.
The 2017 placement was a key step towards achieving the NFIP’s long-term vision of building a stronger financial framework and placed the NFIP in a better position to manage losses incurred from major flood events by transferring exposure to reinsurers.
Q: What types of flood events and what geographic areas does the August 2018 reinsurance placement cover?
A: Whereas the NFIP’s January 2018 traditional reinsurance placement applies to all flood losses covered under the NFIP, the August 2018 reinsurance placement only covers risk from “named storms.” A named storm is a storm or storm system that the National Weather Service’s National Hurricane Center has declared to be a tropical cyclone, tropical depression, tropical storm, or hurricane. The August 2018 placement applies to flooding resulting directly or indirectly from a named storm. However, a major flood event that is not a named storm would not trigger the August 2018 placement. Catastrophe modeling and historical experience indicate that the vast majority of the NFIP’s risk of single flood events causing losses greater than $5 billion (the level at which the August 2018 placement would trigger) stems from named storms.
Likewise, the NFIP’s January 2018 traditional reinsurance placement covers all geographic areas where the NFIP writes flood insurance, including all U.S. territories. In contrast, the August 2018 placement covers the 50 U.S. states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The NFIP has few policies in U.S. territories not included in the geographic scope of the August 2018 placement, and will have no issues paying flood claims in those territories.
Q: How does securing reinsurance affect the NFIP’s current debt?
A: One of the reasons FEMA secured reinsurance in 2017 and 2018 was to protect itself against a portion of its potential flood claim liability and provide an additional way to fund payment of flood claims after a catastrophic event. Securing reinsurance does not reduce the size of NFIP’s current debt to the U.S. Treasury; rather, it is intended to reduce the accumulation of future debt.
Q: Do the NFIP’s reinsurance placements affect policyholders?
A: Reinsurance agreements are between FEMA and reinsurers, and do not impact the NFIP’s contracts with its policyholders. Rather, reinsurance provides the NFIP an additional way to fund payment of flood claims to policyholders, and decreases the likelihood that the NFIP will need congressional action to increase its borrowing authority with the U.S. Treasury.
Reinsurance has a cost, but the January 2017, January 2018, and August 2018 reinsurance placements did not result in an increase in NFIP policyholders’ rates. As the NFIP Reinsurance Program expands in the future, FEMA will work with the Administration and Congress to determine how to cover the costs of a larger program.
Q: What is FEMA’s multi-year reinsurance strategy?
A: In January 2017, FEMA completed a cornerstone placement of reinsurance to establish a multi-year NFIP Reinsurance Program. Continuing this risk management practice, FEMA secured $1.46 billion in traditional reinsurance to cover any qualifying flood losses occurring in calendar year 2018. In August 2018, FEMA entered into a three-year reinsurance agreement to transfer $500 million in flood risk to the capital markets.
Next steps include expanding the NFIP Reinsurance Program and preparing for future engagements with the reinsurance markets.
In practice, this looks like:
- Upgrading the Reinsurance Program’s vision, strategy and operations based on lessons learned to optimize a multi-year strategy;
- Expanding the NFIP’s flood modeling capabilities to inform pricing and business strategies;
- Exploring additional forms of reinsurance; and
- Engaging industry partners as the NFIP continues to build the reinsurance program.
Q: How much money did FEMA recover under the 2017 reinsurance placement as a result of the 2017 hurricane season?
A: As of May 31, 2018, FEMA has paid NFIP policyholders over $8.6 billion for claims resulting from Hurricane Harvey. Therefore, FEMA recovered the entire $1.042 billion in reinsurance as of December 15, 2017.
Q: Does the timing of reinsurance payments affect policyholders receiving claim payments from FEMA?
A: No, FEMA is committed to paying claims to policyholders quickly and fully. The timing of reinsurance payments to FEMA under any reinsurance agreement does not impact claims payments to insured flood survivors.
Additional Resources and Information
- Testing a New Tool to Strengthen Flood Insurance – September 2016
- Increasing Flood Insurance Resilience – The Role of Reinsurance – January 2017
- Behind the Scenes, Private Sector Helps Harvey Survivors through Reinsurance – December 2017
- Public and Private Partnerships Strengthen Flood Protection with Reinsurance – January 2018
- Building a Culture of Preparedness with Reinsurance – July 31, 2018
- The History of the NFIP Reinsurance Program - July 31, 2018