FEMA has renewed the Nationwide Flood Insurance coverage Program’s (NFIP) conventional reinsurance tower for 2025, securing 22% extra in safety for this calendar yr, at simply over $757.8 million, from a broader panel of reinsurer counterparties.
Notably, the 2025 renewal of the NFIP’s conventional reinsurance program was backed by 27 non-public reinsurance corporations, the place as last year’s smaller $619.5 million renewal for 2024 was backed by only 18 reinsurers.
“Along with saying this yr’s conventional renewal, I’m additionally happy to share that the NFIP has elevated its reinsurer participation in this system,” commented Elizabeth Asche, Ph.D., FEMA’s Assistant Administrator for Federal Insurance coverage, and senior govt of the Nationwide Flood Insurance coverage Program.
“We now have 27 reinsurers, up from 18 final yr, strengthening FEMA’s dedication to make use of non-public sector reinsurance to reinforce the NFIP’s capability to pay flood insurance coverage claims.”
This enlargement of the NFIP’s reinsurance panel is much more notable when thought-about within the context of rising flood insurance coverage claims from 2024 hurricanes, which as we reported this week had lifted FEMA’s NFIP loss estimate for hurricane Helene to $6.75 billion, slightly below the $7 billion conventional reinsurance attachment for 2024.
The $757.835 million of conventional reinsurance secured for calendar yr 2025 is costing FEMA whole premium of $139.9 million.
That compares to the $121.1 million paid for $619.5 million last year.
The 2025 reinsurance tower will present FEMA with cowl for NFIP flood insurance coverage losses, at a charge of 12.0334% of losses between $7 billion and $9 billion and 25.8584% of losses between $9 billion and $11 billion.
Alongside three disaster bonds from the FloodSmart Re sequence of offers, FEMA will undergo the 2025 calendar yr with $2.058 billion of danger switch and reinsurance safety towards main flood loss occasions, remembering that the disaster bond element solely covers named storm associated flood losses.
FEMA nonetheless has $1.3 billion in catastrophe bond backed reinsurance outstanding, from cat bonds issued since 2022, so the capital markets proceed to the the NFIP’s largest supplier of flood reinsurance safety.
It’s possible the flood insurance program’s rising losses from hurricane Helene could have performed into this yr’s negotiations for the reinsurance renewal for the NFIP and that is the most recent the data has emerged, suggesting maybe a barely delayed renewal conclusion for the U.S. Federal Emergency Administration Company (FEMA).
Nonetheless, the broad assist achieved, from a bigger panel of reinsurance counterparts, is a really optimistic sign for FEMA’s future capability to build-out the flood reinsurance tower.
As in prior yr’s, Man Carpenter was the reinsurance dealer helping FEMA with its conventional reinsurance buy for 2025.
Wanting again, previous to 2024’s reinsurance renewal of a $619.5 million tower, the NFIP reinsurance tower had shrank dramatically to just $502.5 million in size in 2023, in response to the exhausting and difficult reinsurance renewal market circumstances.
Which was a greater than 50% discount on the prior yr’s $1.064 billion of flood reinsurance secured for the 2022 calendar year.
In years earlier than that, FEMA had renewed its traditional reinsurance program with $1.33 billion of flood reinsurance on the January 2020 renewals, and in January 2019 renewed a $1.32 billion traditional reinsurance placement.
The primary full placement of the NFIP reinsurance tower was in 2018, when FEMA secured $1.024 billion of traditional reinsurance.
