We’ve been patiently waiting and waiting and waiting. On the surface, we are actually thankful to FINALLY have a Proposal on private flood insurance. Well, it’s actually a re-proposal from October 2013, but we’ll take it. As we get into it further, we might not be as thankful, but it’s a starting place and gives us some insight into what the examiners are thinking. Also, it’s important to note the Proposal has not yet been published in the Federal Register and it could be any day now. When it is, comments will be due within 60 days.
Under the Proposal, banks will be required to accept private flood insurance policies that are:
• Issued by a legitimate insurer;
• Provide coverage at least as broad as an NFIP Policy; and,
• Meet additional requirements regarding advance notice of cancellation; restrictions on filing suit after a claim denial; and providing information about the availability of NFIP coverage.
There is also a “compliance aid” which will help you determine whether you have a private flood insurance policy that you’re required to accept. This is not a safe harbor; however, because you could still face liability if you refuse a policy you’re required, per the rule, to accept.
On the surface, this Proposal appears to be quite complex. It contains specific criteria to assist banks in determining whether coverage under a private policy is “at least as broad as” an NFIP Policy and it also has other criteria for private policies that you can choose to accept.
Be sure to check out our November Newsletter for more details.
Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients.
Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!