New data from FEMA shows that its National Flood Insurance Program (NFIP) has paid out over $3.9 billion in claims related to Hurricane Ian to date, meaning the Agency is on the cusp of triggering the bottom layer of protection in its flood reinsurance tower.
Source: Thomas James for WGCU/NPR
The NFIP payout figure, released on May 4th, is up half a billion dollars from the $3.4 billion that FEMA reported at the end of March 2023, with some 48,000 policyholders having now been paid.
At this level, it is just shy of triggering the NFIP’s reinsurance program, which covers 4.163% of losses between $4 billion and $6 billion, as part of its $1.064 billion flood reinsurance tower for the 2022 calendar year.
Additional layers of the program cover 26.565% of losses between $6 billion and $8 billion and 22.453% of losses between $8 billion and $10 billion.
Breaking down the payment figures, FEMA says more than $3.4 billion relates to repairing and rebuilding properties, while $445 million has been assigned to replacing damaged contents, with an average payment of more than $104,000.
As of May 2nd, about 95% of claims in Florida, North Carolina and South Carolina had been closed, FEMA added.
Assuming that the remaining 5% of claims left to pay represent a similar value to those paid so far, this would put the NFIP just over the trigger threshold of its reinsurance program at roughly $4.1 billion, although the eventual total could take some time to confirm as the pace of payments continues to slow, with more complex claims potentially making up a larger proportion of those still to pay.
Back in December, FEMA’s updated estimate for NFIP claims arising from Hurricane Ian stood at between $3.7 billion and $5.2 billion, so it seems losses are set to remain in the lower to middling range of that prediction, unless there are any very large payouts still to make.
“Flooding is the most common and most reoccurring natural disaster. Yet, damage caused by flooding is rarely covered by most homeowners and renters’ insurance,” said David Maurstad, Assistant Administrator for the Federal Insurance Directorate and Senior Executive of the National Flood Insurance Program.
“Flood insurance remains the best defense against this threat, enabling policyholders to protect their property and more quickly jumpstart their road to recovery,” he added.
FEMA began to issue advance payments within a week of the September 28th landfall in Florida, with 41,000 policyholders able to receive total advanced payments of $300 million prior to inspection by an adjuster.
