US disaster relief agency issues another flood bond
The US Federal Emergency Management Agency (FEMA) has returned to the catastrophe bond market to manage risk in its flood insurance programme. The agency is resorting to the insurance-linked security market as it looks to change its financial model.
Commercial insurers, and the cat bonds they use to offset risk to capital markets, are very exposed to US hurricanes, making policies sensitive to wind rather than flooding.That means that losses from wet but less gusty storms such as Hurricane Florence last year, which killed 50 people ...
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