Tower Secures NZ $970M Cat Cover at Reduced Cost; FEMA Map Changes Signal Growing US Flood Exposure
By The Reinsurance Daily Editorial ·
Tower Secures NZ $970M Cat Cover at Reduced Cost; FEMA Map Changes Signal Growing US Flood Exposure
Tower Achieves Favourable Terms on Renewed NZ $970M Catastrophe Program
New Zealand-based insurer Tower has successfully placed its catastrophe reinsurance program for the 2025 financial year, increasing its first-event cover to NZ $970 million, up from NZ $915 million in the prior year. Critically, the placement was secured at a reduced cost, demonstrating continued pricing relief for cedants with well-modelled portfolios in non-US peak zones. The total cost for the catastrophe program is now projected to be 10.6% of full-year gross written premium (GWP), a material improvement from 13.3% in FY23. Tower maintains its multi-year cover for its second event and has a stated target of reducing its reinsurance cost-to-GWP ratio to 9.5% in FY25, signaling confidence in sustained market appetite and pricing discipline.
The catastrophe reinsurance cost is expected to be 10.6% of full-year gross written premium, a material reduction from 13.3% in the 2023 financial year.
Moody's to Launch Risk InvestorIQ Analytics Platform for ILS Market
In a move to enhance transparency for capital markets investors, Moody's announced the forthcoming launch of its Risk InvestorIQ platform, scheduled for H1 2026. The platform is designed to provide sophisticated analytics and evaluation tools for Insurance-Linked Securities (ILS) transactions, particularly catastrophe bonds. The initiative targets an asset class where outstanding cat bonds currently total approximately $18 billion, within a broader alternative capital market reported at $65.6 billion, by offering standardized risk metrics and portfolio evaluation capabilities.
Trump Pledges New AI Adviser Role, Adding Regulatory Uncertainty
Former President Donald Trump has announced his intention to appoint 1 new AI adviser to the White House if elected, though no specific details on the role's mandate or potential candidates were provided. The move introduces further uncertainty into the future of US technology regulation, which could impact insurers' use of algorithmic underwriting and claims processing. The announcement comes as the federal government's investment in AI research and development approaches $7.7 billion, indicating a broad strategic focus on the technology across government.
FEMA Flood Map Updates to Expand Mandatory Insurance Requirements
The Federal Emergency Management Agency (FEMA) is implementing updated flood maps that will expand the designated Special Flood Hazard Areas (SFHAs) across an initial 160 communities. According to analysis from the data firm Cotality, this cartographic re-risking is projected to increase the number of properties requiring mandatory flood insurance by as much as 10% in certain affected areas. This creates a new, non-discretionary demand for flood coverage that will directly impact the National Flood Insurance Program (NFIP) and private market carriers.
EPIC Continues Consolidation with Korotkin Insurance Group Acquisition
Brokerage firm EPIC has acquired the Michigan-based Korotkin Insurance Group, marking its 1st major announced acquisition of the quarter and continuing the unabated trend of broker consolidation. The deal integrates a significant regional player into EPIC's national platform, which reports revenues approaching $17 billion. Such acquisitions concentrate market access and negotiating leverage, impacting how carriers and reinsurers engage with key distribution channels for middle-market and specialty business across the United States.
Key Takeaways
- Tower's placement achieving a cost reduction from 13.3% to 10.6% of GWP for its NZ $970M cat tower provides a tangible benchmark for negotiating improved terms on well-modelled, non-US peak zone programs.
- The market is bifurcating: while well-understood perils like NZ earthquake see pricing relief for cedants like Tower, the forced expansion of US flood insurance demand via FEMA's map updates represents a growing, and likely more expensive, pool of primary risk for reinsurers to assume.
- The expansion of mandatory flood purchase requirements driven by FEMA's new maps creates a clear demand signal for private flood capacity, a market segment that platforms like Moody's Risk InvestorIQ are designed to facilitate by improving transparency for capital providers.
- The proposal for a new US federal AI adviser, while vague, signals potential for new regulatory frameworks impacting algorithmic underwriting and pricing models. The lack of detail from the Trump campaign introduces significant uncertainty for model-driven carriers.
Sources
Tower grows first-event catastrophe reinsurance limit to NZ $970m at reduced cost — artemis.bm
Moody’s launches Risk InvestorIQ to support ILS transaction and portfolio evaluation — artemis.bm
Discipline determines the credit outcome of soft reinsurance market pricing: KBRA — artemis.bm
Trump Says He Will Appoint a New AI Adviser, Without Providing Details — insurancejournal.com
FEMA’s New Flood Maps Means More Homes Require Flood Insurance: Cotality — insurancejournal.com
EPIC Acquires Michigan’s Korotkin Insurance Group — insurancejournal.com
European Insurance and Occupational Pensions Authority — eiopa.europa.eu