Friday, May 05 2023
By the end of March 2023, National Flood Insurance Program (NFIP) claims paid after Hurricane Ian had surpassed $3.4 billion, with more than 46,000 NFIP flood insurance claims received.
As we wrote previously, by mid-January 2023, the NFIP had paid $2.2 billion in claims for Hurricane Ian, the powerful Category 5 Atlantic hurricane which battered Florida in September 2022, becoming one of the costliest re/insured loss events in history at an estimated $55 billion.
The January 17th figure reported by the US Federal Emergency Management Agency (FEMA) represented an almost 28% increase from the January 9th figure.
In early March, the total had risen by more than 45% to $3.2 billion, rising by a further 6% to the more $3.4 billion figure as of the end of that month.
By now, it’s likely that the total has risen even higher, but given that it’s now been seven months since the hurricane it’s likely that the pace of claims would have slowed somewhat.
Of course, FEMA had reinsurance protection in place for the NFIP in 2022 – securing $1.064 billion of flood protection for a total premium of $171.9 million at the January 1st, 2022, reinsurance renewals.
The 2022 program covered portions of NFIP losses above $4 billion arising from a single flood event, structured to cover 4.163% of losses between $4 billion and $6 billion; 26.565% of losses between $6 billion and $8 billion; and 22.453% of losses between $8 billion and $10 billion.
So, with NFIP claims paid now at more than $3.4 billion, the attachment point is approaching, although it’s still someway off and, as noted above, the pace of claims will have slowed given the time that has passed since Hurricane Ian’s impacts.
Back in December, FEMA’s updated estimate for NFIP claims arising from Hurricane Ian stood at between $3.7 billion and $5.2 billion.
FEMA also secures reinsurance protection for the NFIP from the capital markets in the form of catastrophe bonds via its FloodSmart Re program. Of these, the lowest down that are potentially exposed to Ian would only attach at $5.2 billion of losses, so at this stage it appears as though the cat bonds are reasonably safe from loss, barring a late and significant surge in claims, which seems unlikely now