National Flood Insurance Program

Analysts have updated their estimates for the insurance and reinsurance loss caused by hurricane Harvey’s impacts on Texas and the surrounding area, with Morgan Stanley now pegging the industry loss at up to $40 billion including the NFIP portion of flood losses, or up to $25 billion for the private market alone.

Analysts at RBC Capital Markets found that it is the usual reinsurance suspects that are likely to be the most exposed to hurricane Harvey on a reinsurance basis, with Munich Re, Swiss Re and Berkshire Hathaway considered the three likely to take the greatest share of reinsurance losses.

Fitch Ratings said yesterday that the $1.042 billion reinsurance program of the National Flood Insurance Program’s (NFIP) could face a total loss due to hurricane Harvey, but that having 25 reinsurers on the program meant each companies individual loss would likely be manageable.

Risk modelling firm RMS said late yesterday that its models show that hurricane Harvey may result in economic losses from wind, storm surge and inland flood of as high as $70 billion to $90 billion, with the Houston area floods likely to drive the bulk of these costs.

The insurance-linked securities (ILS) market and providers of capital market backed reinsurance capacity can help with the job of narrowing the flood risk protection gap in the wake of hurricane Harvey, according to Rick Miller Managing Director – Co-Head of Insurance Linked Securities at Jardine Lloyd Thompson Capital Markets.

As early estimates of damages from hurricane Harvey point towards an overall economic impact in the low tens of billions of dollars with flooding likely to have caused the majority, the National Flood Insurance Program’s (NFIP) reinsurance layer looks increasingly at risk of paying out.

One of the bills calling for the use of catastrophe bonds, collateralized reinsurance and other private market risk transfer tools to lower the risk held by the U.S. National Flood Insurance Program (NFIP) will now be heard before a Senate committee.

A number of bills aimed at reforming the U.S. National Flood Insurance Program (NFIP), in order to make it a more sustainable system and to factor in more private market insurance and risk transfer, have been passed by the House Financial Services Committee and will now move onto the full House of Representatives for deliberation.

As the National Flood Insurance Program (NFIP) increasingly looks to risk capital, from traditional reinsurance and in the future capital markets, in order to de-risk itself and better protect the taxpayers who ultimately back it, it’s perhaps more likely we see ILS structures in the form of a sidecar than a flood catastrophe bond, S&P […]

A bipartisan draft proposing a raft of changes and amendments to legislation surrounding the National Flood Insurance Program (NFIP) calls on House members to enable the flood insurance pool to cede more of its risk to the capital markets, using a full-range of reinsurance risk transfer tools.