The industry is beginning to adapt to the New Private Flood Insurance Rules as we get closer to the July 1, 2019 mandatory compliance date. We have already discussed this new Rule in previous blogs but there is one recent development that has caused some confusion.
The new Rule mentions a Compliance Aide Statement that lenders may rely on when they are looking at a private policy. Specifically, if a private policy contains the statement, a lender may accept the policy.
We’ve recently seen a few private flood policies that include the Compliance Aide Statement but it is followed by a disclaimer stating that “the insurer is not licensed in the state or jurisdiction in which the property is located”. The Rule also requires that private policies can only be accepted from licensed insurers!
So, what gives?
In some cases, it appears that the “unlicensed insurer” is actually working with a local insurance agent or broker who IS licensed in the state. There is also flexibility with policies issued by “surplus lines insurers”. These are usually a large insurance company (like Lloyd’s of London, for example) that insure areas that a regular insurance company will not. The key is to have a surplus lines insurer that is “not disapproved” by the insurance regulator.
In short, if you see such a disclaimer, don’t panic. The Compliance Aide Statement was designed to make it easier to evaluate the policy and you can rely upon it.
We will be addressing this issue and much, much more regarding private insurance in our “New Private Flood Insurance Rules” webinar on May 29th!
Want to know more about Flood? https://www.bankerscompliance.com/banking-regulations-compliance-services/reviews-2/flood/
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them.
Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).