The Federal Emergency Management Agency has returned to the reinsurance market to restore the National Flood Insurance Program and dropped 28 reinsurance companies for a $ 1.32 billion program, FEMA said in a statement Wednesday.
The one-year period became effective Jan. 1, covering parts of NFIP losses over $ 4 billion arising from a single flood event, said the statement, adding that FEMA paid a total of $ 186 million for the coverage.
When this threshold is reached, the reinsurance will cover 14% of losses between $ 4 billion and $ 6 billion, 25.6% of losses between $ 6 billion and $ 8 billion and 26.6% of losses between $ 8 billion and $ 10 billion, the statement says.
The program joins $ 500 million FloodSmart Re $ 500 million Series 201
Businesses give the agency's total transfer to $ 1.82 billion of NFIP's flood risk for the 2019 hurricane season to the private sector, the statement said, adding that if a navigated storm surge event is large enough to trigger both reinsurance contracts, FEMA receives payments under both reinsurance agreements.
"By reinsurance, FEMA collaborates with private markets to build a pillar that supports a sound financial framework for NFIP through meaningful transfer of the flood risk," said David Maurstad, CEO of the National Flood Insurance Program, in the statement.
FEMA used Guy Carpenter & Co. LLC, a subsidiary of Marsh & McLennan Cos. Inc., a broker and Aon PLC for financial advisory services for the placement, said the statement.