Federal regulatory agencies issued a final rule to implement the Biggert-Waters Flood Insurance Reform Act of 2012, which sets policies for private flood insurance as well as the National Flood Insurance Program.
The rule — which takes effect July 1 – includes several reforms. It allows institutions to rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met and clarifies that institutions may accept private flood insurance policies that do not meet the Biggert-Waters Act criteria. Further, it allows institutions to accept certain flood coverage plans provided by mutual aid societies. Also, it regulates lending institutions from making loans secured by improved real property located in special flood hazard areas unless the property has adequate flood insurance coverage.
The rule was finalized by the Board of Governors of the Federal Reserve System, the Farm Credit Administration, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency.
The National Association of Federally Insured Credit Unions has advocated for improvements to the National Flood Insurance Program (NFIP), including allowing private policies to fulfill the federal flood insurance mandate, increases in coverage limits, capping premiums and rates, and updating federal flood mapping procedures.