Artemis can report that the reinsurance carriers participating in the lowest layer of FEMA’s 2022 National Flood Insurance Program (NFIP) reinsurance tower now appear to be facing losses from hurricane Ian, as the NFIP’s claims from the storm have risen to $4.3 billion.
A FEMA spokesperson told us that the NFIP’s claims burden from hurricane Ian has continued to rise in recent months.
When we last reported back in May, FEMA had disclosed that the NFIP’s claims from hurricane Ian had surpassed $3.9 billion.
That took the claims burden from hurricane Ian very close to triggering the traditional flood reinsurance tower that the NFIP had in-force at the time of the storm.
The attachment for the lowest layer of the 2022 NFIP flood reinsurance tower was at $4 billion of claims.
Now, FEMA told us that, “As of Sept. 12, for Hurricane Ian, the National Flood Insurance Program has paid more than $4.3 billion in claim payments on more than 48,000 claims.”
Taking the hurricane Ian claims burden over the reinsurance attachment point and presumably triggering some reinsurance recoveries from those supporting the lower layer of the NFIP tower.
FEMA had a $1.064 billion flood reinsurance tower for the 2022 calendar year
That reinsurance covered:
- 4.163% of losses between $4 billion and $6 billion.
- 26.565% of losses between $6 billion and $8 billion.
- 22.453% of losses between $8 billion and $10 billion.
As a result, this is not going to be a particularly significant reinsurance recovery, unless the hurricane Ian claims total rises much higher.
We reported earlier this week that FEMA has begun the process to renew the National Flood Insurance Program’s (NFIP) traditional reinsurance tower for 2024.
With more recoveries looking likely from the program now, due to hurricane Ian, those renewal conversations could get a little harder, while there may be more upward pressure on the NFIP reinsurance attachment point and reinsurer participation in the lowest layer.
As a reminder, the lowest down of the FloodSmart Re catastrophe bond program would only attach and begin paying out at $5.32 billion of losses to the NFIP from a flood event, so the hurricane Ian claims development would need to persist for much longer for that level to be reached.