It wasn’t that long ago consumers realistically had only one option when obtaining flood insurance. The National Flood Insurance Program (NFIP), which was initially authorized by the National Flood Insurance Act of 1968 and reauthorized by the Biggert-Waters Flood Insurance Reform Act of 2012, provided that lone option. Earlier this year, five federal regulatory agencies issued a Final Rule that becomes effective July 1, 2019, implementing the BW-12 “requirement that regulated lending institutions accept private flood insurance policies.” Privatization of any product or program creates pricing competition and more options, and flood insurance is no exception. Consumers are able to comparatively shop and lenders will have more opportunities to qualify borrowers.
The final rule can be summarized by the following clarifications:
- Implements the Biggert-Waters Act requirement that regulated lending institutions accept private flood insurance policies that satisfy criteria specified in the Act.
- Allows institutions to rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met.
- Clarifies that institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria; and
- Allows institutions to accept certain flood coverage plans provided by mutual aid societies, subject to agency approval.
Currently, less than 5% of the flood insurance sector is through private insurance outlets. Much of that is comprised of commercial coverage and excess insurance over the maximum $250,000 NFIP restriction for residential properties. Property owners are required to purchase flood insurance if their property is located in a Special Flood Hazard Area (SFHA). The designation is derived by determining if the property has a 1% or greater risk of flooding every year. In the past, private companies have been hesitant to enter a market well known for catastrophic losses, but advances in technology and better mapping have led to renewed interest.
Golden Eagle Insurance has been a provider of force-placed and blanket insurance products for lenders for over 20 years. We are now pleased to offer a private flood insurance outlet for Residential and Commercial property owners. Lenders can use the button below to contact us for information on how to provide their borrowers with a quote. Our policies are compliant with all new Final Rule requirements and rates have consistently been 25-40% lower than what is offered through NFIP.