A private insurer has started selling flood insurance policies in Florida, signalling new opportunities ahead for Bermuda catastrophe reinsurers.

Homeowners Choice Property & Casualty Insurance Company became the first admitted carrier in Florida to offer private flood coverage. It recently sold its first flood policy, AM Best reported.

The move has come in response to hefty increases in premiums planned to be phased in over five years by the US National Flood Insurance Programme (NFIP), as ordered by the bipartisan Biggert-Waters Flood Insurance Reform Act of 2012.

The legislation was intended to help reduce the debt of the NFIP, now estimated at more than $25 billion, by bringing rates charged more in line with the risk and losses in flood-prone areas.

However, lawmakers from coastal states have attempted to delay or halt the premium increases altogether for some policy holders. If other private insurers follow Homeowners’ lead, then the Bermuda market would be well placed to get some extra business providing reinsurance for them.

The Association of Bermuda Insurers and Reinsurers (ABIR) sees taking catastrophe risk off the shoulders of indebted state-subsidised catastrophe programmes as a significant opportunity for growth. Earlier this month, ABIR president Bradley Kading told this newspaper: “As we work with the US policymakers, we see an opportunity to expand in coastal states by moving risk from state pools into private markets.

“There’s an opportunity for private reinsurers to take on more flood risk, which the state of Florida is working on quite aggressively and other states are considering.”

Biggert-Waters ordered an end to many premium subsidies for property owners and a remapping of communities, resulting in more property owners being told they must buy flood coverage.

It meant a series of rate increases for high-risk primary residential properties and most secondary properties.

Homeowners Choice’s first flood coverage policy was for a couple who bought their home in Seminole last year. The family’s flood coverage in 2013 was approximately $9,700 while the 2014 premium was scheduled to total $57,000.

The insurer said it is issued its policy for a total of $9,693, which includes both homeowner’s and flood coverage.