National Flood Insurance Program

The National Flood Insurance Program’s (NFIP) reinsurance tower is coming into view of the rising hurricane Ian claims burden, as NFIP claims filed have now surpassed 35,000, according to the US Federal Emergency Management Agency (FEMA).

Before hurricane Ian devastated western Florida, the U.S. Federal Emergency Management Agency (FEMA) had already begun the process towards a January 2023 renewal of the National Flood Insurance Program’s (NFIP) traditional reinsurance tower.

If the modelled loss estimate for hurricane Ian’s impacts to NFIP policies announced by RMS proves accurate, FEMA’s National Flood Insurance Program’s (NFIP) reinsurance tower and FloodSmart Re catastrophe bonds could pay-out in full.

Catastrophe risk modeller RMS has now provided an initial estimate of insured losses for hurricane Ian, pegging the private insurance and reinsurance market impact at between $53 billion and $74 billion, while saying NFIP losses could be as much as another $10 billion.

Major hurricane Ian is now estimated to have caused a private and public insurance and reinsurance market loss of between $31 billion and $53 billion, from wind, flood and storm surge across all impacted regions, according to CoreLogic.

The US Federal Emergency Management Agency (FEMA) has reported that its National Flood Insurance Program (NFIP) has already received more than 25,000 claims from hurricane Ian.

So far, major hurricane Ian’s approach to the west coast of Florida and the Tampa Bay region has not stimulated a significant amount of catastrophe bond trading, with the secondary market relatively quiet. Except for one telling trade that shows investor nerves over potential storm surge impacts are rising.

The National Flood Insurance Program’s (NFIP) traditional reinsurance tower has been renewed by the U.S. Federal Emergency Management Agency (FEMA) at $1.064 billion in size for 2022, a slight downsizing on the prior year.

According to our sources, an early estimate of the National Flood Insurance Program’s (NFIP) losses from hurricane Ida suggests that its reinsurance program and catastrophe bonds are less likely to face any impact from the catastrophic event.

A hurricane Ida industry loss estimate update from RMS has put the National Flood Insurance Program’s (NFIP) reinsurance counterparties and catastrophe bond investors on-watch for potential losses, as the estimate suggests the traditional reinsurance component at-least is likely to attach and face losses.