2 months ago
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Analysis by Neptune Flood Research Group of FEMA’s National Flood Insurance Program (NFIP) data suggests a current projection for up to $2.5 billion of losses from hurricane Milton, while the 2024 total NFIP claims burden could approach as much as $10.5 billion.
The Neptune Flood Research Group is part of the private specialist flood insurer and has analysed the OpenFEMA dataset to establish where NFIP flood insurance claims sit for hurricane Milton so far.
While the U.S. Federal Emergency Management Agency (FEMA) has not yet provided an official estimate of NFIP claims and losses for hurricane Milton, its claims data is accessible on a redacted basis through an API.
So far, Neptune says that the projection for hurricane Milton is for losses of between $1.5 billion and $2.5 billion, with over 20,000 claims anticipated and more than 18,000 claims already received.
As we reported yesterday, FEMA has provided a preliminary estimate of National Flood Insurance Program (NFIP) losses from hurricane Helene, putting the initial figure in a range from $3.5 billion to as much as $7 billion.
That Helene loss is based on over 55,000 claims received so far.
Neptune said that, “NFIP’s average payout per Ian claim was $106k and from Harvey was $117k, suggesting that total losses from Helene could range between $6 billion to $7 billion before accounting for loss adjustment expenses. With such a loss, Helene will eclipse Ian’s $4.9 billion loss and become a larger financial hit for the NFIP.”
At that level, the Helene NFIP loss could near the lowest layers of NFIP reinsurance.
One of the FloodSmart Re catastrophe bonds is the lowest attaching layer of reinsurance the NFIP tower has, sitting at an attachment level just above $6.5 billion currently, according to FEMA.
Neptune believes that hurricane Milton may only result in between 30% and 50% of the total loss that hurricane Helene will drive for the NFIP, which suggests the Milton impact will fall well-below FEMA’s NFIP reinsurance tower.
As a reminder, FEMA’s traditional reinsurance attaches at $7 billion of losses, while one layer of the cat bonds attaches lower at $6.52 billion.
The NFIP has also seen a further 20,000 plus flood insurance claims from other events in 2024, including hurricanes Beryl, Debby and Francine.
“As such, considering the NFIP has around $4 billion of premium in force, expected losses between $8.2-10.5 billion for the year will result in a 2024 NFIP loss ratio north of 200% before accounting for loss adjustment and other expenses,” Neptune explained.
For the private flood insurance market, Neptune projects a loss across hurricanes Helene and Milton of over $500 million, based on claims filed to-date and reported by the FLOIR.
It’s important to reiterate, that this projection for hurricane Milton is based on claims data recorded so far and given the recency of the storm it may have further to run. FEMA will likely issue its own official estimate for Milton in due course.
Read all about FEMA’s NFIP catastrophe bonds under the FloodSmart Re series of deals.
English (US) ·