The US Federal Emergency Management Agency (FEMA) is turning to reinsurance markets for flood cover for the first time, after disasters in recent years caused its debt levels to rise.

The National Flood Insurance Program (NFIP), administered by FEMA, has incurred debt of $US23 billion ($30 billion) to the US Treasury, with the cost of policy claims far exceeding premiums and fees received.

FEMA this month entered its first reinsurance agreement for the NFIP with Transatlantic Reinsurance, Swiss Re America Holding Corporation and Munich Re America.

The $US1 million ($1.3 million) arrangement is effective to March 19 next year.

An NFIP team is taking steps to begin a “high-quality” program from early January and is identifying and resolving barriers.

“For the early January program, FEMA is still determining the amount of risk it will transfer to reinsurers,” the agency says.

“It will take many years to build up a reinsurance program in which the reinsurance markets bear a significant portion of the NFIP risk.”

Losses from Hurricane Katrina in 20005 reached $US16.3 billion ($21.3 billion), while $US8.3 billion ($10.8 billion) arose from Hurricane Sandy in 2012.

FEMA says reinsurance will not reduce the NFIP debt, but will mitigate against it piling higher.

The NFIP initiative is expected to lead to a multi-year program.

US state schemes already with reinsurance programs include the Citizens Property Insurance Company of Florida, California Earthquake Authority and the Texas Windstorm Insurance Association.