We have a Final Rule for the Private Flood Insurance requirements of the Biggert-Waters Act! If you recall, there was a proposal in October 2013 followed by another proposal in November 2016 to address how lending institutions should be evaluating private flood insurance policies.
We have known for some time that there would be a requirement to accept “private flood insurance” policies. The difficult part was determining whether or not a particular policy would meet the statutory definition. The Final Rule outlines how lending institutions are permitted to exercise their own discretion when accepting flood insurance policies from private insurers. The Rule also addresses plans providing flood coverage issued by mutual aid societies that do not meet the definition of “private flood insurance”.
The Rule streamlines the process of determining whether or not a private policy meets the definition in the regulation. A private policy may be accepted, without further review, if the policy itself or an endorsement to the policy states: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”
Another important part of the rule allows certain policies to be accepted from private insurers, even if they do not meet the definition under the law. Such policies can be accepted so long as they provide “sufficient protection” and your institution documents its evaluation and conclusion in writing.
Rest assured that the team at Banker’s Compliance Consulting is currently reviewing the entire Final Rule. We will be covering the impact of private flood insurance in future articles in our Banking on BCC Magazine, as well as covering it in detail during our Two-Part Webinar Series on Flood Insurance coming up in March.
The Final Rule goes into effect on July 1, 2019, so don’t delay in getting prepared for this new requirement!
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).