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National Flood Insurance Program Reinsurance Program Triggered by Hurricane Harvey

Historically, FEMA paid the National Flood Insurance Program’s (NFIP) claims of insured flood survivors using insurance premiums, available surplus, borrowing capacity from the U.S. Treasury, and in some cases direct Congressional appropriations. In 2017, FEMA added a new risk management tool—reinsurance---to protect the NFIP from large financial losses. As a result, the NFIP has an additional tool within its financial framework to manage losses that result from major events such as Hurricane Harvey.

In January 2017, FEMA made a historic cornerstone placement of reinsurance to establish a multi-year reinsurance strategy. Reinsurance is an important risk management tool used by insurance companies and public entities to protect from large financial losses. Insurance providers pay premiums to reinsurers. In exchange, reinsurers provide coverage for losses incurred by insurance providers up to a specified amount.

Under the 2017 Reinsurance Agreement, FEMA transferred $1.042 billion in flood risk to the private reinsurance markets. This extends the NFIP’s flood claims-paying ability by protecting against a portion of its potential losses. During the calendar year, when NFIP losses exceed $4 billion, the NFIP will receive $0.26 for every dollar of losses between $4 and $8 billion, up to a maximum of $1.042 billion.

In early November, FEMA surpassed $4 billion in paid claims to insured flood survivors of Hurricane Harvey, triggering the NFIP 2017 reinsurance placement. FEMA sent an initial proof of loss to reinsurers on December 5, 2017, requesting the entire $1.042 billion in reinsurance.

For more information, read, “Behind the Scenes, Private Sector Helps Harvey Survivors through Reinsurance,” at FEMA.gov/blog.

Holiday and Travel Safety Toolkit

The Ready Campaign’s Holiday and Travel Safety Social Media Toolkit provides preparedness information and graphics to promote winter safety.

The main tips for holiday and travel safety include:

- Stay off the road during and after a winter storm.

- Keep candles away from flammable materials or consider using flameless candles instead.

- Keep an eye on food when cooking.

- Turn off holiday lights at night.

- Keep your tree watered. Do not let your holiday tree dry out.

For more tips, hashtags, promotional content, Twitter, and Facebook messages, visit www.ready.gov/holiday-toolkit.