FEMA puts call out for 2018 NFIP reinsurance bidsReprints
The Federal Emergency Management Agency has launched a procurement process to secure reinsurance for the National Flood Insurance Program, effective on or about Jan. 1, 2018.
FEMA piloted a reinsurance program for 2016 and secured a new placement effective Jan. 1, 2017, through Jan. 1, 2018, through a consortium of 25 reinsurers arranged through Guy Carpenter & Co. L.L.C.
Under the agreement, the reinsurers indemnified FEMA for flood claims on an occurrence basis. The layer is structured to cover 26% of losses between $4 billion and $8 billion. A combined total of $1 billion of the NFIP’s flood risk was transferred to the private reinsurance market through this agreement.
FEMA was expected to tap the reinsurance layer to deal with claims losses caused by hurricanes Harvey, Irma and Maria.
“FEMA’s 2017 reinsurance placement is triggered when the total losses for a single event exceed $4 billion,” a spokesperson said in an emailed statement. “Based on modeling, FEMA believes that the large losses associated with Hurricane Harvey will allow FEMA to file reinsurance claims. At this time, there is not a firm date on when reinsurance will be triggered to pay premiums.”
Final tenders for the next one-year reinsurance agreement, which will again be brokered by Guy Carpenter, are due by Dec 15.