Continuing its risk management practice against future catastrophic flood losses, FEMA announced its 2020 traditional reinsurance placement for the National Flood Insurance Program (NFIP).
Reinsurance is a financial risk management tool used by private insurance companies and public entities to protect themselves from large financial losses. If a qualifying catastrophic flood event occurs, the reinsurance companies cover a portion of the NFIP’s losses, contributing to FEMA’s ability to pay claims before it needs to borrow from the U.S. Treasury. FEMA transferred an additional $1.33 billion of the NFIP’s financial risk to the private reinsurance market. This annual Reinsurance Agreement is effective from Jan. 1, 2020 to Jan. 1, 2021, with 27 private reinsurance companies.
FEMA Continues its Reinsurance Program to Manage Flood Risk. (n.d.). Retrieved from https://www.floods.org/index.asp?menuID=294&firstlevelmenuID=188&siteID=1