The U.S. Federal Emergency Management Agency (FEMA) has raised its estimate for National Flood Insurance Program (NFIP) losses from hurricane Helene to $6.75 billion, which is near the lower layer of its 2024 traditional reinsurance coverage, as reported by our insurance-linked securities (ILS) focused sister publication, Artemis.
Back in November, FEMA reported that as of November 7th, 2024, over 55,000 Helene flood loss claims had been reported to the NFIP, leading to an initial loss estimate for the flood program of between $3.5 billion and $7 billion.
But sources have confirmed to Artemis that FEMA has now updated its ultimate net loss for the NFIP from the hurricane to an estimated $6.75 billion. Of course, this could rise or fall as it is just an estimate, but at this level, NFIP losses from Helene are nearing the lower layer of the NFIP’s traditional reinsurance protection.
At the January 1st, 2024, reinsurance renewals, FEMA transferred an additional $619.5 million of the NFIP’s financial risk to the private reinsurance market for a total premium of $121.1 million.
The reinsurance placement covers 8.9125% of losses arising from a single qualifying flood event between $7 billion and $9 billion, and 22.0625% of losses between $9 billion and $11 billion. So, at $6.75 billion, Helene losses aren’t too far off the lower $7 billion layer.
The NFIP’s reinsurance coverage also includes capital markets placements in the form of catastrophe bonds, and as reported by Artemis, this $6.75 billion estimate of losses to the NFIP could result in some small losses to one of the FloodSmart Re cat bond tranches.
You can read more about the implications for the FloodSmart Re cat bonds here.
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