Compliance: NCUA issues alert on flood insurance alternatives
Effective July 1, credit unions must accept private flood insurance for applicable loans as defined in the Biggert-Waters Act, in addition to policies available under the National Flood Insurance Program.
There is a streamlined compliance aid for regulated institutions to use in determining if a policy meets the definition of “private flood insurance” without further review of the policy.
Specifically, if the following statement is included within the policy or as an endorsement to the policy, then that policy will comply with the rule: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”
For private flood insurance accepted on a discretionary basis, it must meet the requirements detailed in 760.2 of NCUA’s Rules and Regulations.
For mutual aid society flood insurance plans, they must be approved by NCUA, so credit unions must submit the approval request for these types of plans through the appropriate NCUA Regional office. Approved mutual aid society plans will be posted to the NCUA website for reference.
Credit unions should review and update their policies and procedures to address these alternative options.
The other federal financial regulators and NCUA are hosting a webinar on private flood insurance on June 18th at 2 pm Eastern.