Credit union regulator gives thumbs up to final rule providing more flexibility in flood insurance

A final rule on providing more flexibility for financial institutions in securing flood insurance from private providers was adopted by the federal regulator of credit unions Thursday and announced by the agency Friday.

In a release, the National Credit Union Administration (NCUA) Friday said its two-person board voted unanimously to adopt the final rule, which requires financial institutions to accept flood insurance policies that meet the statutory definition of “private flood insurance.” The final rules also allow financial institutions to exercise their own discretion in accepting other plans, including those by mutual aid societies. The rule had previously been adopted (on Tuesday) by the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC). Approval by the Federal Reserve Board is still pending.

The rules represent amendments to current regulations of the agencies which implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. The rules were released jointly by the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC). The Farm Credit Administration (FCA) also issued the final rule.

The final rule takes effect July 1; the FDIC and OCC effective dates are the same.

More specifically, the final rule requires regulated lending institutions (including credit unions and banks) to accept policies that meet the statutory definition of “private flood insurance” in the Biggert-Waters Act of 2012.

It also notes that the final rule “permits regulated lending institutions to exercise their discretion to accept flood insurance policies issued by private insurers and plans providing flood coverage issued by mutual aid societies that do not meet the statutory definition of ‘private flood insurance,’ subject to certain restrictions.”

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