flood INSURANCE requirements Community Bankers Seminar Takes Aim at National Flood Insurance Requirements flood INSURANCE requirements Community Bankers Seminar Takes Aim at National Flood Insurance Requirements By Bill Perry | Published: August 26, 2011 By BILL PERRY EAST LANSING The Community Bankers of Michigan (CBM) third quarter 2011 Community Bankers for Compliance (CBC) seminar, designed to offer assistance to banks regarding the National Flood Insurance Program, recently gave bankers the opportunity to get the latest on rules and regulations covering INSURANCE requirements that impact banks. The meeting, held last month, provided over 50 community bankers critical information, and the chance to meet and discuss the issues affecting banks in navigating flood program rules and regulations. Even though basic bank requirements have not changed in quite a while, each month more bank names appear on the list of institutions that have experienced civil money penalties for flood-related issues. “While our experience indicates that many of these errors are more technical in nature, fines continue, and looking at the technicalities is worth the time,” said Judi Sullivan, CBM president/CEO. Over 50 community bankers received critical information in navigating through flood program rules and regulations. Bill Elliott, senior consultant and manager of compliance with Young Associates presented information to the group. The focus of his presentation was on the regulation and requirements for banks, and on some sections of the new Flood Insurance Manual, issued by FEMA, the federal government department that runs this program, in May, 2011. “The most difficult portion of compliance for the next few years will revolve around the speed of the changes rather than the content,” Elliott explained. “Bank management and the board will need to assure that their staffs have the time and resources to make the necessary transitions. Solutions using technology are attractive, but technology without training may result in larger issues for banks.” According to Elliott, the flood INSURANCE manual is written for INSURANCE agents. However, there are significant sections that will be of use to bankers. The seminar manual included more in depth discussions of the entire flood INSURANCE process than what has been included in previous flood INSURANCE seminars. The manual includes a review of the requirements to date for banks under the National Flood Insurance Program. As part of the requirements, the manual includes a synopsis of “dos and don’ts” for some flood-related issues. Background and History According to floodsmart.gov, the National Flood Insurance Program’s official Website: In a high-risk area, a home is more than twice as likely to be damaged by flood as by fire. Between 20 and 25 percent of the NFIPs claims come from outside high-risk areas. The average annual U.S. flood losses from 2001-2010 were more than $2.7 billion. Since 1978, the NFIP has paid over $36.9 billion for flood INSURANCE claims and related costs (as of 12/31/10). Most homeowners INSURANCE does not cover flood damage. Flooding has long been the costliest and most devastating disaster in the United States. For decades, the national response to flood disasters was generally limited to constructing flood control systems such as dams, levees, seawalls, and the like, and providing disaster relief to flood victims. This approach did not reduce losses, nor did it discourage unwise development. In addition, building techniques to reduce flood damage were often overlooked. To compound the problem, the public generally could not buy flood coverage from INSURANCE companies which were largely unwilling to underwrite and bear the risk of flood because of its catastrophic nature. In the face of mounting flood losses and escalating costs of disaster relief to the general taxpayers, the U.S. Congress created the National Flood Insurance Program (NFIP). The intent of Congress was to reduce future flood damage through community floodplain management ordinances, and provide protection for property owners against potential losses through a federal INSURANCE mechanism that requires a premium to be paid for the protection. Elliott discussed all aspects of the regulations and requirements, along with many additional items from the new manual. While he did not cover every line in the new manual, which is over 400 pages, he did focus on issues that are of the most interest to bankers. “We have chosen this subject at this time due in part to the new manual, and with the anticipation that Dodd-Frank, the Consumer Financial Protection Bureau, and other agencies will keep the CBC program very busy over the coming quarters,” Sullivan added. Regulatory Update Even though the Federal Reserve Board has tabled many of their proposed changes, they are continuing to issue new and revised regulations and proposals that are required to be completed within certain time frames in order to comply with the Reform Act (Dodd-Frank). As a result of Dodd-Frank and other federal activities, more change is inevitable, and the second half of 2011 may be very challenging for banks. It will be even more challenging if banks do not have the current versions of regulations under control. The CBC program remains committed to keeping bankers aware and prepared. We will always work toward this goal. CBM is anticipating that seminars later in the year will be dedicated to the massive changes that will be issued in response to the Reform Act (Dodd-Frank). Seminar timing for these issues and others will be based on the timing of the pronouncement and implementation dates. flood INSURANCE requirements Article Source: mibankermag/community-bankers-seminar-takes-aim-at-national-flood-INSURANCE-requirements/
Posted on: Sat, 04 Oct 2014 11:34:59 +0000
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