Can You Accept a Foreign Private Flood Insurance Policy?
Adam uses this Compliance Clip (video) to answer a question about a private flood insurance policy issued by an overseas insurer. The policy contains the compliance aid, but the question asks whether they must accept the policy since they don’t feel comfortable with the insurer.
Video Transcript
The following is a transcript of this video:
In this Compliance Clip, we are going to answer the question on whether or not you have to accept an overseas private flood insurance policy. The question I got a while back was this: Are we required to accept a private flood insurance policy that is from an overseas insurer, such as a foreign insurer, that has the compliance aid statement?
What happened here was that they received a private flood insurance policy that had the compliance statement built into the policy, but they weren't sure that they wanted to accept this policy. They felt like they might be obligated to accept it. So our answer to this, of course, comes from the interagency guidance on the mandatory acceptance of private flood insurance.
If you were to receive a flood insurance policy that's a private policy that includes the compliance aid on that, are you required to automatically accept that policy? The answer to that is no. You're not required to rely on the compliance aid. What you're required to do under the interagency guidance on the mandatory acceptance of private flood insurance is you are required to accept a private policy if it meets the definition of private flood insurance. Now, just because the compliance aid is on the policy doesn't mean that it automatically meets the definition of private flood insurance. That compliance aid can be used for you to not have to review the policy, and you can rely on that compliance aid and accept the policy if you choose to do so. It's kind of a safe harbor, but that compliance aid doesn't mean that you have to accept the policy.
The requirement to accept the policy comes from whether or not the policy meets the definition of private flood insurance. In this specific case, where the insurer was an overseas insurer and a foreign company, it was not a US company, the concern was that the policy did not meet the definition of private flood insurance. And what the interagency guidance says is if you have that case, you are permitted to do your own review and conduct your own review to determine if the policy meets the definition of private flood insurance. In other words, you do not need to rely on the compliance aid. You can conduct your own investigation.
Now, you probably don't wanna do that in every case, but in odd cases like this where there's a foreign company and a foreign insurer, it may be beneficial to conduct your own review. If your review results show that the policy does meet the definition of private flood insurance as defined by the interagency guidance, then you are required to accept it. But if it does not, then at that point you can choose if you want to accept it through a discretionary acceptance or if you want to deny the policy altogether. So the short answer to this question is you're not required to accept it just because of the compliance aid being on the policy. You can conduct your own review.