Attachment A - PWS 2025 For Reinsurance Broker Services_eb 2.7.25 (002).docx eb.docx

Performance Work Statement (PWS) National Flood Insurance Program (NFIP) Reinsurance Broker Services

2/27/25

Contents

1 Background The National Flood Insurance Program (NFIP) was created in 1968 as a result of the continuing periodic flood disasters experienced by communities throughout the US that damaged or destroyed infrastructure, buildings, and homes, making it difficult for the communities and their residents to recover. The mission of the NFIP is to (1) identify the special flood hazard areas (SFHAs), (2) develop standards for effective floodplain management in those SFHAs and (3) provide flood insurance to building and homeowners.

1.1 Overview

The National Flood Insurance Program (NFIP) was created in 1968 as a result of the continuing periodic flood disasters experienced by communities throughout the US that damaged or destroyed infrastructure, buildings, and homes, making it difficult for the communities and their residents to recover. The mission of the NFIP is to (1) identify the special flood hazard areas (SFHAs), (2) develop standards for effective floodplain management in those SFHAs and (3) provide flood insurance to building and homeowners.

The NFIP has experienced many large flood disasters over its history, particularly in the years 2005, 2008, 2012, and 2017, and has thereby incurred a significant debt to the US Treasury of $20.5 billion as a result of the flood disasters and the carrying charges on the debt. Historically, Resilience have utilized a limited set of tools in managing the volatility of the NFIP’s risk exposure. Therefore, at the beginning of 2017, Resilience implemented a reinsurance program to transfer some NFIP insurance risk to the private sector as an additional method of managing the NFIP’s financial risk.

The Federal Emergency Management Agency (FEMA) has evaluated the NFIP’s risk profile in order to quantify its financial risks and to explore ways to better manage the potentially large losses that the NFIP could incur.

FEMA has determined reinsurance to be an important mechanism to transfer a portion of the NFIP ‘s insurance risk to the private sector reinsurance and capital markets as used by most primary insurers. This risk transfer mechanism spreads the impact of the insured risks of disasters across the global financial system rather than falling on a single insurer or handful of institutions.

FEMA implemented the NFIP Reinsurance Program (NRP) on January 1, 2017. The primary objective of the NRP is to reduce the risk and volatility of the NFIP through implementation of a shared financial risk model. The Federal Insurance Directorate (FID) of FEMA is building a long term NRP and expects that it will continue to evolve. FID’s primary condition of success for the NRP will be the extent to which the NRP reduces the risk and volatility of the NFIP at a fair and reasonable price to the Government and subject to the availability of funds.

To support the continued execution of the NRP, FID requires reinsurance brokerage expertise to provide the services set forth within this PWS

2.0 Scope

2.1 Purpose

The purpose of this acquisition is to obtain support services from a reinsurance brokerage firm as FID continues to build and expand the NRP. FID has separated the required broker support services into three Work Areas – Strategic Advisory and Support, Placement Execution and Administration, and Modeling and Risk Analytics, as described below. Compensation for these work areas would include potential multiple placements effective within a one-year period.

The purpose of this acquisition is to obtain support services from a reinsurance brokerage firm as FID continues to build and expand the NRP. FID has separated the required broker support services into three Work Areas – Strategic Advisory and Support, Placement Execution and Administration, and Modeling and Risk Analytics, as described below. Compensation for these work areas would include potential multiple placements effective within a one-year period.\

2.2 Objective

FID intends to partner with an experienced reinsurance broker who will provide FID with expert strategic advisory, cost-effective placement solutions, and advanced analytical support, with the ultimate goal of reducing NFIP's financial volatility. The contractor will deliver a cohesive reinsurance program that balances FID’s financial objectives with market-competitive pricing and compliance with federal guidelines.

2.3 Description of Services

Contractor shall provide the necessary personnel to deliver the reinsurance broker as FID continues to build and expand the NRP by this Performance Work Statement. These contractor personnel shall have expertise in and experience with the reinsurance industry.

FID requires the contractor to deliver support within three tasks: 1) Strategic Advisory and Support, to provide reinsurance strategy development, and financial and general advisory services; 2) Placement Execution and Administration, to create new reinsurance structures for the NRP for the following: Alternative or new traditional reinsurance structures; 3) Modeling and Risk Analytics, perform data modeling and analysis to inform yearly NRP design as well as enable successful delivery of the NFIP’s risk profile to reinsurance markets. The specifics required by each Task are explained in the subsections below.

3.0 Task Areas

3.1 Task 1: Strategic Advisory and Support

3.1.2 Within this Work Area, the Broker is required to provide reinsurance strategy development, and financial and general advisory services. The Broker will provide ongoing overall financial and general advisory services to FEMA-FID, particularly through the development of annual and long-term goals, metrics, strategy, and engagement coordination with key stakeholders. Reinsurance financial and advisory services shall include but not be limited to risk management, disaster risk management, capital management, regulatory issues, and transition risk. The Broker shall advise on:

3.1.2.1 Capital and risk management, including capital modeling, and enterprise risk management. This may include post-processing of the final catastrophe model output.

3.1.2.2 Market Security management encompassing Market Intelligence and client counter-party risk selection.

3.1.2.3 Regulatory insights and advice including rating agency advisory, peer analysis, benchmarking, and reinsurance agreement interpretation.

3.1.2.4 Bespoke problem solving and thought leadership on emerging issues.

3.1.3 The Strategic Advisory and Support work includes:

3.1.3.1 The Broker will develop comprehensive strategies for the following reinsurance structures that could be implemented by FID:

3.1.3.1.1 Expansion on existing reinsurance structure

3.1.3.1.2 Alternative or new traditional reinsurance structures

3.1.3.1.3 The strategies should consider the NFIP’s current financial conditions and future financial goals, federal law (statutes and regulations), FEMA-FID leadership priorities, NFIP budget, and work within the existing and future traditional placements, with consideration of the insurance linked securities placements for the NFIP.

3.1.3.2 The Broker will:

3.1.3.2.1 Review modeling results to inform reinsurance strategies.

3.1.3.2.2 Assist FID in identifying possible hurdles to any given structure and potential solutions.

3.1.3.2.3 Provide administrative support and training for leadership and staff meetings.

3.1.4 To support development of these strategies, the Broker will have access to NFIP data, modeling results, and FEMA-FID staff to learn more about NFIP financial framework and leadership priorities, subject to Federal and FEMA security processes and information sharing procedures.

3.1.5 The Broker will have the opportunity to ask questions and give feedback on the data modeling process and results for each work area, FID will select the most effective strategy.

3.2 Task 2: Placement Execution and Administration.

3.2.2 The Placement Execution and Administration support includes:

3.2.2.1 Creation of new reinsurance structures for the NRP for the following: Alternative or new traditional reinsurance structures

3.2.2.2 The Broker will align FID leadership and staff to purpose and outcomes of the new structure, including holding educational sessions.

3.2.2.3 The Broker will design the infrastructure for the structure to include the development of programmatic and contractual materials and assist in developing any standard operating procedures.

3.2.2.4 The Broker will provide ongoing support to FID as the structure is developed.

3.2.3 This Work Area also encompasses the market outreach and placement of the FID approved structure.

3.2.4 Compensation for work performed under this Work Area is contingent on successful placement(s).

3.2.5 The Broker will execute work in a collaborative and coordinated manner with FID.

3.2.6 Additional support shall include:

3.2.6.1 market and place the following structures:

3.2.6.2 Expansion on existing reinsurance structure

3.2.6.3 Alternative or new traditional reinsurance structures

3.2.7 The Broker will support FID in the market outreach effort as described in the Strategy and Development phases and include a detailed analysis of the reinsurance markets.

3.2.8 The Broker will implement the strategy developed including, but not limited to, analyses, consulting support, contract upgrades, standard operating procedures, and marketing material.

3.2.9 The Broker will assist FID in the preparation of all documentation associated with reinsurance agreements.

3.2.10 Regarding the solicitation, negotiation and award of reinsurance agreement(s), FID will elect one of the following options:

3.2.10.1 The traditional approach of selecting and releasing Firm Order Terms (FOT) in which the Broker will serve as an advisor during the price discovery and award process.

3.2.10.2 FID will make the final decision about reinsurers’ price/Firm Order Terms (FOT) if this option is elected.

3.2.10.3 Replace the traditional price discovery and award process with an online marketplace/auction platform supplied by the selected broker.

3.2.10.4 Replace the traditional price discovery and award process with an online marketplace/auction platform supplied by an independent vendor.

3.2.11 The Broker will assist FID in presenting a single NFIP risk profile separately for several major catastrophe model vendors to the market and ensure placements are well coordinated.

3.2.12 The Broker will provide operational support of the NRP after the reinsurance is placed, including, but not limited to:

3.2.12.1 Continuous monitoring of the NFIP’s risk profile, portfolio modeling, and data analysis

3.2.12.2 Continuous monitoring and analysis of individual reinsurers and the reinsurance market as a whole

3.2.13 Cooperation with any additional contractors that are under contract with Resilience FEMA-FID to assist in their understanding of the objectives and progress of the NRP.

3.2.14 The broker will conduct premium payments and claim recoveries on FID’s behalf in accordance with the process outlined by FEMA in Appendix E – FEMA Reinsurance Broker as Fiscal Administrator for the lifetime of the respective placement(s).

3.2.15 The broker will assist FID with additional placement(s) based on available funds in a given year to include all steps above as necessary to complete placement.

3.3 Task 3: Modeling and Risk Analytics

3.3.2 This Work Area requires the Broker to perform data modeling and analysis to inform yearly NRP design as well as enable successful delivery of the NFIP’s risk profile to reinsurance markets.

3.3.3 The broker shall provide quantitative skills and modeling tools to help optimize reinsurance decision making. In addition to catastrophic risk modeling, this shall include actuarial support if applicable.

3.3.4 The Broker will review and understand the NFIP data provided by FID and enhance and augment as necessary. The NFIP has approximately four million contracts in the United States.

3.3.5 The NFIP premiums are based on a number of factors including the replacement cost, number of floors, occupancy, elevation, location, and differentiation based on basement/crawlspace.

3.3.6 FID will provide relevant geographic and structural characteristics for its policyholders from its System of Record, Pivot, in order to effectively prepare NFIP exposure data for catastrophic risk modeling.

3.3.7 The Broker will review the original data provided by FID and perform initial quality-checks to ensure data has been appropriately transferred and captured in the data extract.

3.3.8 The Broker will also compare year-over-year changes to the original data extract and note any anomalies or significant changes in the data before proceeding with the data augmentation or adjustments.

3.3.9 Using the latest NFIP exposure and claims data provided by FID, the Broker will refine and enhance that data so that it is suitable for catastrophic risk modeling.

3.3.10 Then, using the refined data, model the NFIP risk profile using at least three flood risk models, commercial or proprietary, to account for inland flood and coastal storm surge. Flood related perils for which the available models are less mature can be enhanced using additional approaches. Non-modeled flood related perils will be reflected using additional approaches.

3.3.11 The contractor will provide FID with the benefit of the Broker’s perspective regarding the nuances of each model and modeling issues in general.

3.3.12 When requested, the contractor will collaborate with FID on risk management governance and partner in addressing FEMA-FID risk management strategies.

3.3.13 The contractor will conduct analysis and advise FID on how to combine the results from multiple models in a scientifically credible fashion, taking into account the individual characteristics of the NFIP portfolio of exposures and historical loss experience.

3.3.14 Additionally, the contractor will advise FID about the relative strengths and weaknesses of models in their various aspects, for example, perils or geography, and how “model blending” can combine the best from multiple models. The result will be a customized view of catastrophe exposure that is much more specific, with less direct reliance on any one vendor model, and is reasonably understood and justifiable to management and stakeholders.

3.3.15 The contractor will evaluate and adjust commercial models where available and develop models to fill gaps in coverage where FID requires additional analysis.

3.3.16 The contractor will utilize post-processing tools to build a sound blending of multiple models and combine model output across perils.

3.3.17 The Broker will analyze the modeling results to produce a detailed explanation of the NFIP risk profile in a manner that will build reinsurance markets’ confidence in the data and models.

3.3.18 The Broker will consult with the other broker during the development of the NFIP risk profile and assist the other broker with its validation of the modeling results.

3.3.19 As model results are being developed, the Broker will update and adjust the model as necessary.

3.3.20 The Broker may be requested to act as the system administrator for the catastrophe modeling environment within the National Information Technology Center (NITC).

3.3.21 The Broker will provide technical advisory services for FID as they develop their internal modeling environment.

3.4 Catastrophe Modeling and Actuarial Subject-Matter Expertise

3.4.2 The Broker will provide technical support and subject matter expertise to FID as they run market baskets and the NFIP profile through the catastrophe models in the Reinsurance Broker System (RBS).

3.4.3 The Broker will provide subject matter expertise on the evolving flood insurance market, providing model-change reviews as existing flood models get updated and new flood models become available.

3.4.4 The Broker will conduct historical back-testing against NFIP claims and/or other relevant methodologies to inform FID how catastrophe models should be post-processed to better reflect NFIP risk.

3.4.5 Using the distribution of losses derived from the above catastrophic risk modeling process, the broker will provide detailed loss and other relevant statistics and metrics for the gross NFIP portfolio, ceded NFIP layers/reinsurance structure, and the NFIP portfolio net of ceded reinsurance.

3.4.6 At FEMA-FID’s option, this will additionally be provided in requested geographical detail and/or multiple year projections.

4. Deliverables 4.1The Contractor shall execute the requirements of this contract using a Project Schedule that outlines key milestones, deliverable timelines, and reporting deadlines.

4.1.2 The Project Manager shall coordinate with FEMA FID to finalize project milestones and maintain a schedule that aligns with agreed-upon work product expectations and deliverable timeframes.

4.1.3 The schedule shall be reviewed regularly and updated as necessary to reflect any changes in project scope, priorities, or unforeseen delays.

4.1.4 The table below provides an initial list of deliverables along with the expected due dates. Specific due dates shall be finalized in collaboration with FEMA FID.

4.2 Project Schedule and Deliverables

by mid-October

Market selection reports for analysis on reinsurers’ financial condition reflecting mergers/acquisitions

Other Analyses and Review as Needed and Agreed Quarterly, markets to approach for renewal by mid-Nov

By mid-October, earlier as needed and agreed

2: Placement Execution and Administration

Marketing plan for reinsurance market engagement.

London and European Markets US Annual PCI Meeting by mid-August

Reinsurer meetings and presentations

NFIP Submission to Reinsurers

2nd Exec Panel Meeting incl Quotes Presentation and final structure options by October unless PCI schedule delayed by October end by late November

Review of exposure data post-analysis for pre- model input decisions Data exposure reports of original, NFIP-provided data and augmented data.

by July by mid-September by mid-October

Catastrophe Modeling and Actuarial reports (including results summaries, event-loss-tables, etc.)

by late October

Analytics Narrative documenting augmentation process and results in support of reinsurance placements, by Oct end

4.3 Project Schedule Coordination

4.3.1 The Contractor's Project Manager shall maintain the project schedule and ensure all deliverables are submitted within the specified timeframes.

4.3.2 Any changes or delays in deliverables must be communicated to FEMA FID in writing, along with justification and a proposed revised schedule.

4.3.3 The project schedule shall be reviewed and updated monthly, incorporating feedback from FEMA FID and key stakeholders.

4.3.4 The Contractor shall maintain records of all deliverable submissions and ensure proper documentation of project milestones.

5 Performance Requirements Summary The Performance Requirements Summary (PRS) outlines key performance indicators, measures, and standards for the Reinsurance Broker Services under the National Flood Insurance Program (NFIP). It serves as the basis for evaluating contractor performance and ensuring that the objectives of the NFIP Reinsurance Program (NRP) are met in a cost-effective, compliant, and efficient manner.

5.1 Performance Objectives & Standards

The contractor shall provide expert strategic advisory, cost-effective placement execution, and advanced analytical support to reduce NFIP’s financial volatility. The Contracting Officer’s Representative (COR) will monitor the contractor’s performance based on the following key objectives and performance measures.

5.2 PRS Table

Task 1: Strategic Advisory and Support

Task 2: Placement Execution & Administration

Task 3: Modeling & Risk Analytics

Task 4: Compliance & Reporting

6. Monitoring & Evaluation

6.1 The Contracting Officer’s Representative (COR) will conduct periodic performance evaluations using:

6.1.1 Weekly status meetings to track deliverable progress

6.1.2 Quarterly compliance reviews for financial and risk compliance

6.1.3 Annual performance audits to assess effectiveness and adherence to contract terms

6.1.4 Reinsurance placement analysis to evaluate pricing effectiveness

6.2 Corrective Action & Consequences

6.2.1 If performance deficiencies are identified, the contractor shall:

6.2.2 Submit a corrective action plan within 10 business days.

6.2.3 Implement changes as directed by FEMA-FID.

6.2.4 Undergo increased performance monitoring until full compliance is restored.

6.2.5 Failure to meet performance standards may result in financial penalties, contract termination, or loss of future contract opportunities.

7.0 Qualifications and Key Personnel

7.1 In accordance with HSAR 3052.215-70 Key Personnel or Facilities (DEC 2003), the personnel specified below are considered essential to the performance of this contract.

7.2 Changes to these personnel may be made with the consent of the contracting parties during the course of the contract by adding or deleting personnel, as appropriate.

7.3 Before removing or replacing any of the designated Key Personnel, the Contractor shall notify the Contracting Officer (CO) in writing before the change becomes effective.

7.4 The notification shall include sufficient information to support the proposed action and enable the CO to evaluate the potential impact of the change on contract performance.

7.5 The Contractor shall not remove or replace any designated Key Personnel until the CO approves the change in writing.

7.6 The following Contractor personnel are designated as Key Personnel under this requirement. The Government reserves the right to designate additional Key Personnel at the time of award or during contract performance.

7.7 Note: The Government may designate additional Contractor personnel as Key at the time of award.

8.0 KEY PERSONNEL

8.1 Lead Broker the Contractor shall provide a Senior Broker that is responsible for all activity of the Broker Reinsurance Contract for all work areas as defined by the Statement of Objectives.

8.1.1 The Lead Broker must have significant relevant work experience (over 20 years) in reinsurance brokerage services and at least ten (10) years of relevant work experience in flood or other natural catastrophic perils.

8.2 Lead Data Modeler. The Contractor shall provide a Senior Data Modeler that is responsible for overseeing the catastrophic risk analytics required under the Broker Reinsurance Contract for all work areas as defined by the Statement of Objectives.

8.2.1 The Lead Data Modeler must have significant relevant work experience (over 10 years) in flood or other natural catastrophic perils data analysis and modeling.

9.0 Place of Performance

9.1 Work performed under this contract shall take place primarily at the contractor’s place of business. The majority of communications for work performed under this contract shall take place via electronic and telephonic means – email, conference call, video conference, and computer screen share.

9.2 When the contractor has staff located in the DC metro area that allows for convenient and affordable travel to the Resilience headquarters office, then by invitation from an authorized FID employee, the contractor may be asked to travel to FID’s office in order to complete a task within one of the work areas.

9.3 FEMA-FID headquarters is located at: 400 C St SW, Washington, DC 20024.

10.0 Period of Performance

10.1 The period of performance of this contract shall include one 12-month base period and four (4) 12-month option periods.

11.0 Progress Reports

11.1 The Project Manager shall provide a monthly progress report to the Contracting Officer and COR via electronic mail.

11.2 This report shall include a summary of all Contractor work performed, including a breakdown of labor hours by labor category, all direct costs by line item, an assessment of technical progress, schedule status, any travel conducted and any Contractor concerns or recommendations for the previous reporting period.

12.0 Applicable Documentation

12.1 The work performed under this contract shall comply with DHS, FEMA, and FID specific regulations, policies, memorandums, or directives.

13.0 Other Direct Costs

13.1 Travel

13.1.1 Out of area travel is not allowed unless the contractor is given advance authorization and approval by the contract’s designated CO and/or COR. FEMA does not anticipate the need for regular travel in order to perform this work; however, the need for travel may arise so the contractor can attend in-person meetings with FEMA, its reinsurers, brokers, and any other reinsurance and insurance-linked securities-related agents related to the design of a reinsurance agreement and/or other agreements necessary for obtaining reinsurance through private reinsurers and the capital markets. If this situation occurs, FEMA will give the contractor advance notice.

13.1.2 If travel costs are incurred by the contractor, then they shall comply with the Federal Travel Regulations (FTR) and Federal Acquisition Regulations (FAR) Subpart 31.205-46, Travel costs, when billing for travel expenses.

13.2 Material Expenses

13.2.1 Material expenses are not anticipated under this contract. Specifically, the following charges related to overhead costs and internal charges shall not be reimbursed, including but not limited to:

13.2.1.1 Office supplies.

13.2.1.2 Charges for local and long-distance telephone service, teleconference lines, and facsimile

13.2.1.3 Imaging or scanning service costs.

13.2.1.4 Document file/storage and retrieval costs.

13.2.1.5 Rent for office space, equipment, or software.

13.2.1.6 Charges for case management systems.

13.2.1.7 Charges for meeting rooms

13.2.1.8 Catering.

13.2.1.9 Postage.

14.0 Handling of Information

14.1 Contractor compliance with this clause, as well as the policies and procedures described below, is required while handling information.

14.2 Department of Homeland Security (DHS) policies and procedures on Contractor personnel security requirements are set forth in various Management Directives (MDs), Directives, and Instructions. MD 11042.1, Safeguarding Sensitive but Unclassified (For Official Use Only) Information describes how Contractors must handle sensitive but unclassified information.

14.3 DHS uses the term “FOR OFFICIAL USE ONLY” to identify sensitive but unclassified information that is not otherwise categorized by statute or regulation.

14.4 Examples of sensitive information that are categorized by statute or regulation are PCII, SSI, etc. The DHS Sensitive Systems Policy Directive 4300A and the DHS 4300A Sensitive Systems Handbook provide the policies and procedures on security for Information Technology (IT) resources.

14.5 The DHS Handbook for Safeguarding Sensitive Personally Identifiable Information provides guidelines to help safeguard SPII in both paper and electronic form. DHS Instruction Handbook 121-01-007 Department of Homeland Security Personnel Suitability and Security Program establishes procedures, program responsibilities, minimum standards, and reporting protocols for the DHS Personnel Suitability and Security Program.

14.6 The Contractor shall not use or redistribute any sensitive information processed, stored, and/or transmitted by the Contractor except as specified in the contract.

14.7 All Contractor employees with access to sensitive information shall execute DHS Form 11000-6, Department of Homeland Security Non-Disclosure Agreement (NDA), as a condition of access to such information. The Contractor shall maintain signed copies of the NDA for all employees as a record of compliance. The Contractor shall provide copies of the signed NDA to the Contracting Officer’s Representative (COR) no later than two (2) days after execution of the form.

14.8 The Contractor’s invoicing, billing, and other recordkeeping systems maintained to support financial or other administrative functions shall not maintain SPII. It is acceptable to maintain in these systems the names, titles and contact information for the COR or other Government personnel associated with the administration of the contract, as needed.

14.9 For additional information- Appendix G Process - 06-26-2024.pptx image1.jpeg