Final Rule mandates credit unions accept private flood insurance
Federal regulatory agencies (including the NCUA) have proposed a final rule that implements legislative changes to the National Flood Insurance Program (NFIP). The final rule requires credit unions to accept private flood insurance. The Biggert-Waters Act, which prompted this rule, amended the flood insurance program to create rules for escrow of insurance premiums, for accepting private flood insurance, and to clarify force placement of insurance.
In requiring the acceptance of private flood insurance, the rule provides a compliance aid to assist credit unions in determining whether the non-NFIP policy meets the statutory definition of “private flood insurance.” The rule also allows credit unions to accept policies that do not meet the definition of “private flood insurance.” These changes are intended to reduce the costs to the taxpayer of subsidizing the insurance program while protecting the lending institutions and home owners from risks associated with flooding events. It is estimated that the NFIP is indebted to the Treasury Department for approximately $20 billion.