NCUA issues regulatory alert regarding flood insurance alternatives
Wednesday, May 29, 2019
This week, NCUA released a regulatory alert regarding flood insurance alternatives. Effective July 1, 2019, credit unions must begin accepting private flood insurance policies for applicable loans. These policies must meet the definition of private flood insurance as included under the Biggert-Waters Act. In addition to this, credit unions may accept private flood insurance policies that do not meet the definition of private flood insurance, as well as NCUA-approved private flood insurance plans provided by mutual aid societies.
This regulatory alert details what criteria a private flood insurance policy must meet in order to qualify. In practice, since it may be difficult to determine if the policy meets the criteria, the rule includes a compliance aid for a credit union to use in determining if a policy meets the definition of private flood insurance without further review of the policy. If the following statement is included within the policy, or as an endorsement to the policy, the policy complies with the rule. It should state: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”
The alert also goes into detail regarding Private Flood insurance accepted on a discretionary basis, and mutual aid society plans. You may read the rest of the alert at the link below.
Additionally, the federal financial regulatory agencies are hosting an interagency discussion of recent updates to the agencies’ flood insurance regulations concerning acceptance of private flood insurance policies in June. It was previously scheduled for May and is now scheduled for June 18, 2019. Details on that can be found here.
Read the Alert Here »