ABA RCC Flood Issues
By David Dickinson
I'm continuing to report about things I learned while at the ABA's Regulatory Compliance Conference (ABA RCC) in Chicago in June. I had the fantastic opportunity to speak on a Flood Panel with a representive from FEMA, the FDIC and two bankers. Here's some things we discussed that I thought may be of interest to you:
- Flood Zone Discrepancies:
- AE vs. AO (or others). The FDIC representative said they are not worried about this. Flood insurance is in place and premium is same. What they are concerned about is A vs. B, C, D, X (the Standard Flood Hazard Determination Form indicating the building is "in" a Special Flood Hazard Area and the insurance represents a building not "in").
- This is a big deal to the regulators right now.
- Flood Insurance is a "risk management" issue and needs to be treated as such.
- Replacement Cost Value:
- If the NFIP doesn't require RCBAP to 100% (only 80%), then why is FEMA Guidelines pushing 100% RCV on General and Dwelling policies? [Sorry, that's a rhetorical question to which I have no answer.]
- FEMA/NFIP are working on eliminating the co-insurance penalty on RCBAPs. We should see this in the next 2 years.
- Mobile Home Policies: Can they include Flood Insurance automatically?
- If the insurance was purchased prior to 1/07, it MAY automatically have Flood Insurance.
- If the insurance was purchased after 1/07, Flood Insurance CAN be purchased as a rider.
- If included, does it meet the 6 requirements of Private Insurance as outlined on page 57-58 of the FEMA Guidelines (section 5)?
- A private flood insurance policy that meets all six of the FEMA criteria described in a. through f. below conforms to the mandatory flood insurance purchase requirements of the 1994 Reform Act. To the extent that the private policy differs from the NFIP Standard Flood Insurance Policy (SFIP), available on the FEMA website at http://www.fema.gov/business/nfip/sfip.shtm, the differences should be carefully examined before the policy is accepted as sufficient protection under the law.