The Federal Emergency Management Agency will pay $121.1 million to transfer $619.5 million of flood risk to the private reinsurance market, FEMA said in a statement.
Both the premium and the amount of risk transferred increased compared to this time last year, when FEMA paid $90.2 million to shift $502.5 million in flood risk. Like last year, FEMA this year worked with 18 reinsurers to fill out its program.
The 2024 reinsurance placement covers portions of National Flood Insurance Program losses above $7 billion arising from a single qualifying flood event, the agency said.
The agreement, FEMA said, is structured to cover 8.9% of losses between $7 billion and $9 billion and 22% of losses between $9 billion and $11 billion.
Since 2021, FEMA has transferred $1.91 billion in flood risk to the private market, it said.
The latest placement shows the reinsurance market remains difficult, said David Maurstad, FEMA’s deputy associate administrator for resilience and senior executive of the NFIP.
“With continued difficult market conditions this year, FEMA remains committed to long-term use of private sector reinsurance,” he said in a statement. “However, the program will adjust NFIP reinsurance investments whenever necessary to reflect market conditions as we did again this year.”
As recently as 2022, FEMA was able to purchase $1.06 billion in reinsurance from 28 private companies with a premium of $171.9 million.
FEMA again contracted with Guy Carpenter and Co. to provide broker services to assist in securing the reinsurance placement.