Requirements for Accepting Private Flood Insurance Policies

In its response to a joint-proposal from five federal agencies on when lenders may accept private flood insurance policies (the Federal Reserve, OCC, FDIC, NCUA, and Farm Credit Administration), FSR noted that the proposal’s requirements will likely stifle the ability of insurers to create a vibrant private-sector market for flood insurance coverage. The letter notes that neither lenders or insurers are in a position to verify that the coverage provided in a private flood insurance policy meets the provisions of what is covered in polices offered by the federal government. To help encourage the development of a the private market, FSR suggests that regulators allow lenders to have the discretion to accept private flood insurance policies that are comparable to policies offered by the Federal Government and offered by highly rated insurers. FSR also supports efforts to create more permissive standards in offering flood insurance on commercial properties.

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