Federal Emergency Management Agency

The National Flood Insurance Program

June 9, 2017 – Presentation to Advisory Committee on Risk Sharing Mechanisms
National Flood Insurance Program...it is not all about flood 

2016 Flood policies in Force 5.1 MillionInsurance in Force $1.25 TrillionCommunities 22,235Cash On Hand $1.08 BillionReserve Fund $160 MillionAvailable to borrow $5.8 BillionOutstanding borrowing $24.6 Billion

14% 11%

31%

5.1m Policies

$1.3 Trillion Insured Limit

3

NFIP

INSURANCE MITIGATION & 

INCENTIVES
0%

20%40%60%80%100%120%140%160%

$ M

$500 M

$1000 M$1500 M$2000 M$2500 M$3000 M$3500 M$4000 M

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Premium & Losses Cumulative Loss Ratio

Losses Paid Earned Premium Cum. Loss Ratio

$17.77B $9.52B

The 21st Century has brought a new landscape.....

NFIP’s o

the US 

Earned Premium & Loss Paid by Year

Source: FEMA website

Katrina Sandy

 $-

 $5.0

 $10.0 $15.0 $20.0 $25.0 $30.0

2005 2006 2007 2008 2009 201

Billions
2012 NFIP Reauthorization and The Flood Insurance Risk S

38%

31%

19%

7% 5%

Annual Average Loss

Blended SAIR InlandHU Precip Named TS ALAE-Attr

* Scaled to reflect NFIP exp

Flood risk analytics (surge, riverine)

Flood modeling study

Reinsurance viability study

Flood privatization study
2016 FEMA becomes first Federal Agency to secure reinsu

Phase 1 – Administrative Reinsurance Test (ART):

• Execute reinsurance placement per authority granted • Test internal processes to ensure smooth reinsurance • Keep it simple, but achieve robust system check

• Term: 9/19/16 – 3/19/17• Reinsured Limit: $1,000,000 with 1 reinstatement

− Limit 1: Aggregate Coverage xs $5.0 Million− Limit 2: Occurrence Coverage xs $5.5 Billion

• Premium mechanics designed to tested billing proces• Program designed to experience loss and test claim 

and collection processes

PROGRAM 

PARAMETERS 

MECHANICS

GOALS
2017 NFIP expand reinsurance with its “Cornerstone” Placem

$10B

claims

paying

capacity

~ $3B from 

premium net of 

expenses and 

normal loss, 

plus reserve 

fund levy

$6B claims 

paying capacity 

from authorized 

borrowing

Issues & C

• Creating Stak

Related Risk 

• Federal Regs • Handling Data 

Analytics

• Establishing R

Process

• Determining A

Structure givepriorities

• Establishing c

protocols as ithrough the ex

Net Premiums

Available Borrowing 

Authority

Reserve Fund 

Congress 

Reinsurance

26% of 

$4b xs $4b

Summary

• Occurrence based coverage• $150M premium spend• 25 reinsurers on the panel• Very good response in 

challenging circumstance
Flooding is a significant challenge that requires more respec

The risk goes well beyond the Special Flood Hazard Areas

# of Flood Event by Cou

- Over past 2 decades, 

- 80% of counties have se- 97% have seen at least 

- >50% of US GDP originate

Coast

- > 50% of population in wat

# of NFIP Policies / Housing Units

- 92% of counties see take-up 

≤ 5%

- 62% of counties see take-up 

≤ 1%

- NFIP’s portfolio is large but marked by 

peak concentrations
NFIP Moonshots
FEMA and the NFIP can not do it alone...all Stakeholders m

Public 

Sector Distribution Risk Transfer PPP 
Sound Financial Framework

noun cus·tom·er ex·pe·ri·ence\ˈk

əs-t

ə-m

ər\ \ik-ˈspirē

-

ən(t)s\

A customer’s perception of their interactions with an organizatiotouchpoints and channels throughout the duration of that relatio

Customer experience 

NFIP Initiatives