In response to the COVID-19 pandemic, FEMA is extending the grace period for National Flood Insurance Program (NFIP) renewals. For customers who may be experiencing financial hardships, the agency is extending the grace period to from 30 to 120 days. This extension applies to NFIP flood insurance policies with an expiration date between February 13-June 15, 2020.
To avoid a lapse in coverage, there is typically a 30-day grace period to renew policies. However, due to the widespread economic disruption arising from this pandemic, FEMA recognizes that flood insurance policyholders may not meet the standard policy renewal deadline.
“FEMA understands the sense of urgency related to financial hardships and wants to be proactive,” said David Maurstad, Deputy Associate Administrator of FEMA’s Federal Insurance and Mitigation Administration, who oversees the NFIP. “We want to make sure that policyholders don’t have to worry that their policy will lapse during the spring flood season or into the start of hurricane season. We hope this extension will give policyholders some peace of mind and allow them extra time to renew their policies to ensure they are covered should a flood loss occur.”
Earlier this year, the US Federal Emergency Management Agency (FEMA) has successfully transferred $400 million of the National Flood Insurance Program’s (NFIP) flood risk to the capital markets through the issuance of its third catastrophe bond transaction, Reinsurance News reports.
Under the terms of the latest agreement, FEMA is set to pay $50.28 million in premiums for the first year of reinsurance protection. At the same time, FEMA states that the agreement will cover 33.3% of losses for any single flood event with losses between $6 billion and $9 billion, and 30% if that same event has losses of between $9 billion and $10 billion.