The big day is coming! I suspect by now, you’ve heard a great deal about the implementation of provisions of the Biggert-Waters Flood Insurance Reform Act of 2012, requiring regulated institutions to accept certain private flood insurance policies in addition to National Flood Insurance Program policies.
What happens on July 1st?
- Regulated lending institutions will be required accept private flood insurance policies that satisfy criteria specified in the Act;
- Institutions can rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met;
- Institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria; and
- Institutions can accept certain flood coverage plans provided by mutual aid societies, subject to agency approval.
This year’s 2019 Private Flood Report includes comments from compliance consultants to the banking industry, who are working with their clients to educate lenders and compliance officers in advance of the enforcement of this Act (which can cost a institution $2,000 per policy, no cap, for non-compliance).
There are concerns that too much responsibility will be placed upon lenders to make determinations, with recommendations that agents educate their local marketplace on their offering to reduce friction around the new process. Further, they urge that all policies that do meet the criteria, carry the Compliance Aid Statement, to assure institutions that the criteria has been met.
If you haven’t seen it yet? It simply reads:
“This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”
What can you do? Network with your lenders and inform them of the change, and make them comfortable with your offering. Discuss approval processes and find out if additional review time is required by banks, in order to avoid delays on loan closings.
Finally, what can you expect from the 2019 Private Flood Report?
- Market share & trends
- Top commercial carriers
- Top residential carriers
- Geographic spotlight on high risk storm surge coastal states
Check out all of our hurricane resources on Research & Trends in preparation for the season. As it is now upon us, may our coastlines be safe and our homeowners and businesses be protected.
Happy reading – Pam Simpson
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