The U.S. Federal Emergency Management Agency (FEMA) has increased the size of its flood reinsurance program for 2018, securing $1.46 billion of coverage for the National Flood Insurance Program (NFIP).
The 2018 NFIP reinsurance program has been placed with 28 private reinsurers and will provide the NFIP with coverage across two layers of risk on a per-occurrence basis.
The 2018 flood reinsurance program will cover 18.6% of the NFIP’s losses between $4 billion and $6 billion, and 54.3% of losses between $6 billion and $8 billion.
The coverage cost FEMA a total premium of $235 million for 2018. As in 2017, the program was placed by reinsurance broker Guy Carpenter, while Aon Benfield provided advisory services this year.
The reinsurance program runs for the full 2018 calendar year and the 40% increase in program size will have been welcomed by reinsurers at the renewals. The increase in program size is a clear reflection of reinsurance market appetites to assume more U.S. flood insurance risk.
FEMA paid over $7.6 billion in losses to policyholders due to flooding caused by Hurricane Harvey, calling on its $1.042 billion 2017 reinsurance program and receiving a payout in full from its reinsurers.
Roy Wright, FEMA administrator for the NFIP, commented on the 2018 flood reinsurance renewal saying, “To build upon FEMA’s commitment to strengthen our ability to cover future flood losses, we secured $1.46 billion in reinsurance to cover any qualifying flood losses occurring in 2018. This placement demonstrates our commitment to expand reinsurance coverage as part of a multi-year strategy.”
The 28 reinsurers that have underwritten the $1.46 billion 2018 flood reinsurance program for FEMA and the NFIP are some of the world’s largest:
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), and XL Reinsurance America, Inc.