FEMA expands private flood risk transfer with US$757.8 million reinsurance agreement

27 insurers join effort to safeguard NFIP against severe storm losses

FEMA expands private flood risk transfer with US$757.8 million reinsurance agreement

Reinsurance

By Kenneth Araullo

The Federal Emergency Management Agency (FEMA) has finalized its 2025 traditional reinsurance placement for the National Flood Insurance Program (NFIP), transferring US$757.835 million of the program’s financial risk to the private reinsurance market.

The latest agreement involves 27 private reinsurance companies providing coverage for the 2025 calendar year. Under the terms of the agreement, FEMA will pay US$139.9 million in premiums for coverage on portions of NFIP losses exceeding US$7 billion from a single qualifying flood event.

The reinsurance structure covers 12.0334% of losses between US$7 billion and US$9 billion and 25.8584% of losses between US$9 billion and US$11 billion. This arrangement adds to FEMA’s previous capital markets reinsurance placements in 2022, 2023, and 2024, bringing the total amount of flood risk transferred to the private sector to US$2.058 billion.

If a named storm flood event triggers all active reinsurance agreements, FEMA will receive payments to cover qualifying claims.

Elizabeth Asche, Ph.D., FEMA’s assistant administrator for federal insurance and senior executive of the NFIP, noted the increase in reinsurer participation this year, rising from 18 to 27 companies.

“We now have 27 reinsurers, up from 18 last year, strengthening FEMA’s commitment to use private sector reinsurance to enhance the NFIP’s ability to pay flood insurance claims,” Asche said.

Reinsurance serves as a risk management tool that allows both private insurers and public entities to protect against significant financial losses. In the event of a major flood, the reinsurance coverage enables FEMA to cover claims without relying on borrowing from the US Treasury.

Guy Carpenter and Company, a subsidiary of Marsh & McLennan Companies, acted as FEMA’s broker for the 2025 reinsurance placement, assisting in securing the agreement.

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