The Federal Reserve Tuesday became the fourth – and final – federal financial institution regulator to sign on to new flood insurance reform provisions, the agency announced in release.
The provisions had previously been approved (and adopted) by the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), and the National Credit Union Administration (NCUA). The Farm Credit Administration (FCA) has also adopted the provisions.
First reported in January, after the FDIC and OCC took action (followed by NCUA early this month), the new provisions take effect July 1. They 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.
According to a joint release issued Tuesday by the agencies, the provisions:
- Implement the Biggert-Waters Act requirement that regulated lending institutions accept private flood insurance policies that satisfy criteria specified in the act;
- Allow institutions to rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met;
- Clarify that institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria; and
- Allow institutions to accept certain flood coverage plans provided by mutual aid societies, subject to agency approval.
“Specifically, the final rule requires regulated lending institutions to accept policies that meet the statutory definition of ‘private flood insurance’ in the Biggert-Waters Act,” the summary of the final rule states. 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.”