In recent days, several key banking regulators approved a long-awaited Final Rule that would allow lenders to accept private flood insurance policies so long as a policy is “at least as broad” as a standard NFIP policy. The multifamily industry has long urged policymakers to support policies that would foster a more robust private flood insurance market to complement the critical role the National Flood Insurance Program (NFIP) plays in mitigating risk.
Under the final rule, private policies would need to contain a statement certifying that it does meet that standard. For apartment owners and operators, this rule will pave the way for greater flexibility and enhanced policy choices that will better allow them to mitigate the financial risks posed by flooding events.
The rule has been approved by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency and awaits final approval from the Federal Reserve, Farm Credit Administration and National Credit Union Administration. It would go into effect July 1 once approved by those agencies.
Expanding the role of the private flood insurance market has been a key priority for the multifamily industry for many years. NMHC/NAA submitted supportive comments on the initial proposed rule in 2017 and have continued to press Congress on the issue as it has debated and reauthorized the NFIP several times in recent years. Expanding the private flood market has also been one of the main sticking points in negotiations in Congress in reaching a long-term NFIP reauthorization because of concern that a boost in private flood coverage could come at the expense of the NFIP’s financial viability.
NMHC/NAA will continue its advocacy and urge Congress to reauthorize the NFIP on a long-term basis and reform the program in such a way that allows multifamily owners and operators to better insure against destructive flooding events.
For more information on the NFIP and our industry’s advocacy efforts, please click here.