Artemis has reported that the U.S. Federal Emergency Management Agency (FEMA) is planning for a potential mid-year 2018 reinsurance placement for the National Flood Insurance Program (NFIP), as it looks to expand the reinsurance program it started last year.
During a keynote speech at the SIFMA IRLS 2018 conference in Miami, Roy E. Wright, NFIP Chief Operating Officer (COO) and FEMA Deputy Associate Administrator for Insurance and Mitigation, said that FEMA is “planning for a mid-year placement” and is “evaluating ILS and all forms of reinsurance,” reported Artemis.
In January 2017 FEMA placed its first major reinsurance program, a NFIP flood reinsurance arrangement that transferred $1.024 billion of risk from the NFIP to 25 reinsurance carriers, which, was fully exhausted and paid out following the impacts of hurricane Harvey in Texas.
FEMA then returned to the reinsurance marketplace at the start of 2018, with a larger and restructured $1.46 billion reinsurance placement secured from a panel of 28 private reinsurers, providing the NFIP with coverage across two layers of risk on a per-occurrence basis.
And now it appears that FEMA could be planning to tap the reinsurance markets again in 2018, potentially expanding its use of reinsurance capital, ultimately bringing more U.S. flood risk to the private market.
According to Artemis, Wright explained that both FEMA and the NFIP are committed to an expanded use of reinsurance capital sources and risk transfer, in order to build support from the private markets in an effort to de-risk the program.
FEMA also remains committed to exploring the insurance-linked securities (ILS) arena for risk transfer, although Wright said that there’s no guarantee this will happen in 2018.
