USA – FEMA to Recover $1 Billion in Reinsurance

The Federal Emergency Management Agency (FEMA) announced that it is submitting a claim to recover the full $1.042 billion in reinsurance coverage under its 2017 Reinsurance Program.

In November this year, FEMA surpassed $4 billion in paid claims to insured flood survivors of Hurricane Harvey, triggering the NFIP reinsurance placement.

Damage from hurricanes Harvey, Irma and Maria this year have generated more than 120,000 NFIP claims, marking the second largest claims year in NFIP history.

NFIP has paid over $6.687 billion in claims so far, with processing ongoing.

Members of the South Carolina’s Helicopter Aquatic Rescue Team (SC-HART) perform rescue operations in Port Arthur, Texas, August 31, 2017 after Hurricane Harvey (U.S. Air National Guard photo by Staff Sgt. Daniel J. Martinez)

The reinsurance claim is based upon the National Flood Insurance Program (NFIP)’s losses associated with Hurricane Harvey. Those paid losses exceeded the minimum threshold for the NFIP’s reinsurance coverage.

Earlier this year, the NFIP transferred $1.042 billion of the NFIP’s financial risk to the private reinsurance markets, marking a key step towards a stronger and more resilient program.

In January 2017, FEMA executed the 2017 Reinsurance Agreement with 25 reinsurance markets representing some of the largest insurance and reinsurance groups around the globe. The 2017 placement of reinsurance will cover a portion of NFIP losses above $4 billion arising from Hurricane Harvey, saving taxpayers almost $1 billion.

Under the 2017 Reinsurance Agreement, reinsurers agreed to indemnify FEMA for flood claims on an occurrence basis. It is structured to cover 26 percent of losses between $4 billion and $8 billion, up to a maximum of $1.042 billion. FEMA paid a total premium of $150 million for the coverage.

On November 6, 2017, FEMA surpassed $4 billion in paid claims to insured flood survivors of Hurricane Harvey, triggering the NFIP reinsurance placement. While FEMA is working diligently to understand the full extent of losses to the 2017 NFIP, loss estimates range between $8.5 billion and $9.5 billion, which would mean that FEMA will recover the entire $1.042 billion in reinsurance. FEMA sent initial bills to reinsurers today.

So far, the trifecta of Hurricanes Harvey, Irma and Maria generated more than 120,000 NFIP claims, marking the second largest claims year in NFIP history. NFIP has paid over $6.687 billion in claims so far, with processing ongoing. Reinsurance will not impact claims payments to insured flood survivors.

FEMA’s 2017 reinsurance placement was a cornerstone for a multi-year strategy that promotes private sector participation in flood-risk management. FEMA is in the process of securing a new reinsurance placement for 2018.

FEMA received the authority to secure reinsurance through the Biggert-Waters Flood Insurance Reform Act of 2012, and the Homeowner Flood Insurance Affordability Act of 2014. Hurricane Sandy claims ($8.3 billion) in October 2012 and Hurricane Katrina claims ($16.3 billion) in August 2005 resulted in program debt when the cost of flood policy claims far exceeded the NFIP’s premium revenues; reinsurance places the NFIP in a better position to manage losses incurred from similar major events.

Source: FEMA

Flood Summary

Last updated: September 6, 2017
Event
Hurricane Harvey, USA, August 2017
Date
August 26, 2017
Type
Urban flood, River flood, Storm surge
Cause
Storm surge, Extreme rainfall

Locations

A - Cypress
B - Spring
C - Katy
D - Barker Dam
E - Addicks Dam
F - Alvin
G - Atascocita
H - South Houston
I - Houston
J - Mont Belvieu
K - Clear Creek Village
L - Baytown
M - Rockport
N - Port Arthur
O - Beaumont
P - Lake Charles, Louisiana

Magnitude

Rainfall level
680 mm in 24 hours
Pearland, Brazoria County - August 26 to August 27, 2017
Rainfall level
584 mm in 24 hours
Alvin, Brazoria County - August 26 to August 27, 2017
Rainfall level
697.23 mm in 24 hours
Dayton, Liberty County - August 26 to August 27, 2017
Rainfall level
558 mm in 24 hours
South Houston - August 26 to August 27, 2017
Rainfall level
622.3 mm in 24 hours
Santa Fe, Galveston County - August 26 to August 27, 2017
Rainfall level
511 mm in 24 hours
Mount Houston - August 26 to August 27, 2017
Rainfall level
604 mm in 24 hours
Bacliff, Galveston County - August 26 to August 27, 2017
River level
12.04 metres
Greens Bayou at Houston - August 28 to August 28, 2017
level as of 28 August: 39.51 feet / Previous record: 39.4 feet
River level
39.05 metres
Cypress Creek near Cypress - August 28 to August 28, 2017
level as of 28 August: 128.11 feet / Previous record: 127.6 feet
River level
29.27 metres
Cypress Creek near Westfield - August 28 to August 28, 2017
level as of 28 August: 96.06 feet / Previous record: 94.3 feet
River level
11.04 metres
Navidad River at Sublime - August 28 to August 28, 2017
level as of 28 August: 36.23 feet / Previous record: 34 feet
River level
8.97 metres
Navidad River near Speaks - August 28 to August 28, 2017
level as of 28 August: 29.44 feet / Previous record: 28.2 feet
River level
20.56 metres
Buffalo Bayou at Piney Point Village - August 28 to August 28, 2017
level as of 28 August: 67.46 feet / Previous record: 61.23 feet

Damages

Evacuated
35,000
August 26 to August 31, 2017
35,000 people were evacuated and staying in over 200 shelters. According to media reports, over 1 million people were displaced overall: in Texas: 779,000 mandatory evacuations; 980,000 voluntary evacuations. In Louisiana: 7,000 mandatory evacuations; 133,000 voluntary evacuations (source: Reuters)
Fatalities
44 people
August 26 to August 31, 2017
According to media reports
Buildings destroyed
7,000
August 26 to August 31, 2017

Flood Summary

Last updated: October 9, 2017
Event
Hurricane Maria, Caribbean, September 2017
Date
September 17 to September 25, 2017
Type
River flood, Storm surge
Cause
Storm surge, Extreme rainfall

Locations

A - Dominica (Dominica)
B - Guadeloupe (Guadeloupe)
C - Puerto Rico (Puerto Rico)
D - Dominican Republic (Dominican Republic)
E - Haiti (Haiti)

Magnitude

Rainfall level
246.4 mm in 24 hours
Le Raizet, Guadeloupe - September 19 to September 20, 2017
River level
10.11 metres
Rio Culebrinas near Moca, Puerto Rico - September 20 to September 20, 2017
Major Flood Stage: 29 feet (8.83 m) ; Historic Crest 36.60 ft (11.15 m) in 1975
River level
10.99 metres
Rio Grande De Manati near Manati - September 20 to September 20, 2017
Major Flood Stage: 34 feet (10.36 metres) ; Historic Crest: 36.39 ft ( 11.09m) in 1996
Storm surge
1.61544 metres
Yabucoa Harbor, Puerto Rico - September 20 to September 20, 2017
National Ocean Service tide gauge at Yabucoa Harbor reported a water level of 5.3 ft (1.61544 metres) above Mean Higher High Water.
Rainfall level
80.3 mm in 24 hours
Punta Cana, Dominican Republic - September 21 to September 22, 2017

Damages

Fatalities
1 person
Guadeloupe - September 17 to September 20, 2017
Fatalities
7 people
Dominica - September 17 to September 20, 2017
Fatalities
1 person
Guadeloupe - September 17 to September 20, 2017
Fatalities
3 people
Haiti - September 20 to September 25, 2017

Flood Summary

Last updated: September 11, 2017
Event
Hurricane Irma, Caribbean and USA
Date
September 6, 2017
Type
Flash flood, Storm surge
Cause
Storm surge, Extreme rainfall

Locations

A - Barbuda
B - Saint Martin
C - Anguilla
D - Haiti
E - Turks and Caicos Islands
F - Dominican Republic
G - Bahamas
H - Florida

Magnitude

Storm surge
3 metres
St Martin - September 7 to September 7, 2017
Storm surge
2.7 metres
Barbuda - September 6 to September 6, 2017
Rainfall level
250 mm in 24 hours
Puerto Rico - September 7 to September 7, 2017
Rainfall level
200 mm in 24 hours
Southern Bahamas
Model estimated rainfall near 200 mm in the Southern Bahamas

Damages

Fatalities
29 people
September 6 to September 11, 2017
It is not know wether fatalities were a direct result of flooding or wind damage. As of 11 September, fatalities reported in: Anguilla - 1; Barbuda - 1; US Virgin Islands - 4 ; Puerto Rico - 3; Saint Martin and Saint Barthélemy - 11; Sint Maarten - 4 ; Florida, USA - 4

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