The Federal Emergency Management Agency (FEMA) has announced it will be procuring reinsurance for the National Flood Insurance Program (NFIP) to be effective on or about January 1, 2024.
To participate in the reinsurance procurement, FEMA said that vendors must submit a request to participate by December 1, 2023 (the date on or about FEMA anticipates Firm Order Terms will be issued), and final tenders by December 5, 2023 (the date on or about FEMA anticipates final authorisations will be due from the reinsurance markets).
FEMA said it intends to procure reinsurance for flood risk in the United States insured by the NFIP. Guy Carpenter is FEMA’s broker and will act as the third-party intermediary for the intended procurement of reinsurance.
“FEMA intends to procure reinsurance on or about January 1, 2024, to be effective for one or more years,” the agency explained.
The procurement of reinsurance will be an agreement of indemnity between FEMA and private reinsurance firms. FEMA noted it 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.
The agency added that it intends to procure reinsurance by following standard reinsurance industry practices.