Private Flood Ins. – The preamble to the final rule states that “some factors… that a regulated lending institution could consider in determining whether a flood insurance policy provides sufficient protection…

Compliance > Lending > Flood > 2019 Private Flood Insurance Rule
Q:  The preamble to the final rule states that “some factors… that a regulated lending institution could consider in determining whether a flood insurance policy provides sufficient protection… includes… whether the flood insurance policy complies with applicable State insurance laws and whether the private insurance company has the financial solvency, strength and ability to satisfy claims.”  How do we know that the private insurers are financially stable?
 
A:  If the lender has concerns about a private insurance company's financial stability, the lender can evaluate the insurance company further by contacting the state insurance regulator’s office of the state in which the property securing the loan is located.  In general, the lender can rely on the licensing or other processes used by the state insurance regulator to evaluate an insurance company's financial solvency, strength, and ability to satisfy claims.
 
 
This Q&A was part of the discussion in the Outlook Live – 2019 Interagency Flood Insurance Update on Private Flood Insurance Rule webinar held on 6/18/19 and focused on the new private flood insurance rules that become effective 7/1/19.  Information may be found here:   https://www.webcaster4.com/Webcast/Page/577/30085
 
 

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