NFIP Expands Flood Reinsurance
The Federal Emergency Management Agency (FEMA) has expanded its flood reinsurance program for the National Flood Insurance Program (NFIP) to $2.12 billion after successfully completing a $300 million FloodSmart Re Ltd. (Series 2019-1) cat bond issuance. There is now $800 million of pure U.S. flood insurance risk in the catastrophe bond market, providing a new peril class for investors and insurance-linked securities funds to allocate to. FEMA says it will pay $32 million in premium for the first year of reinsurance coverage from its second catastrophe bond, and effective April 17. FEMA says it has entered into a three-year reinsurance agreement with Hannover Re (Ireland) Designated Activity Company.
“These capital market placements complement the NFIP’s existing traditional reinsurance coverage, allowing FEMA to grow the NFIP Reinsurance Program that protect against future flood losses,” FEMA explained.