Federal Register Extracts

Agency: "Federal Emergency Management Agency, Department of Homeland Security."

SUMMARY: The Federal Emergency Management Agency announces the Fiscal Year 2023 Financial Assistance/Subsidy Arrangement for private property insurers interested in participating in the National Flood Insurance Program's Write Your Own Program.

DATES:

Interested insurers must submit intent to subscribe or re-subscribe to the Arrangement by June 21, 2022.

FOR FURTHER INFORMATION CONTACT: Sarah Devaney Ice, Federal Insurance and Mitigation Administration, FEMA, 400 C St. SW, Washington, DC 20472 (mail); (202) 320-5577 (phone); or [email protected] (email).

SUPPLEMENTARY INFORMATION:

I. Background The National Flood Insurance Act of 1968 (NFIA) (42 U.S.C. 4001 et seq.) authorizes the Administrator of the Federal Emergency Management Agency (FEMA) to establish and carry out a National Flood Insurance Program (NFIP) to enable interested persons to purchase flood insurance. See 42 U.S.C. 4011(a). Under the NFIA, FEMA may use insurance companies and other insurers, insurance agents and brokers, and insurance adjustment organizations as fiscal agents of the United States to help it carry out the NFIP. See 42 U.S.C. 4071. To this end, FEMA may "enter into any contracts, agreements, or other appropriate arrangements" with private insurance companies to use their facilities and services in administering the NFIP on such terms and conditions as they agree upon. See 42 U.S.C. 4081(a).

Pursuant to this authority, FEMA enters into a standard Financial Assistance/Subsidy Arrangement (Arrangement) with private sector property insurers, also known as Write Your Own (WYO) companies, to sell NFIP flood insurance policies under their own names and adjust and pay claims arising under the Standard Flood Insurance Policy (SFIP). Each Arrangement entered into by a WYO company must be in the form and substance of the standard Arrangement, a copy of which is published in the Federal Register annually, at least 6 months prior to becoming effective. See 44 CFR 62.23(a). To learn more about FEMA's WYO Program, please visit https://nfipservices.floodsmart.gov/write-your-own-program.

II. Notice of Availability

Insurers interested in participating in the WYO Program for Fiscal Year 2023 must contact Sarah Devaney Ice at [email protected] by June 21, 2022.

Prior participation in the WYO Program does not guarantee FEMA will approve continued participation. FEMA will evaluate requests to participate in light of publicly available information, industry performance data, and other criteria listed in 44 CFR 62.24 and the FY 2023 Arrangement, copied below. FEMA encourages private insurance companies to supplement this information with customer satisfaction surveys, industry awards or recognition, or other objective performance data. In addition, private insurance companies should work with their vendors and subcontractors involved in servicing and delivering their insurance lines to ensure FEMA receives the information necessary to effectively evaluate the criteria set forth in its regulations.

FEMA will send a copy of the offer for the FY 2023 Arrangement, together with related materials and submission instructions, to all private insurance companies successfully evaluated by the NFIP. If FEMA, after conducting its evaluation, chooses not to renew a Company's participation, FEMA, at its option, may require the continued performance of all or selected elements of the FY 2022 Arrangement for a period required for orderly transfer or cessation of the business and settlement of accounts, not to exceed 18 months. See FY 2022 Arrangement, Article II.C. All evaluations, whether successful or unsuccessful, will inform both an overall assessment of the WYO Program and any potential changes FEMA may consider regarding the Arrangement in future fiscal years.

Any private insurance company with questions may contact FEMA at: Sarah Devaney Ice, Federal Insurance and Mitigation Administration, FEMA, 400 C St. SW, Washington, DC 20472 (mail); (202) 320-5577 (phone); or [email protected] (email).

III. Fiscal Year 2023 Arrangement

Pursuant to 44 CFR 62.23(a), FEMA must publish the Arrangement at least six months prior to the Arrangement becoming effective. The FY 2023 Arrangement provided below is substantially similar to the previous year's Arrangement, but includes the following substantive changes:

1. In Article II.C. (Commencement and Termination), FEMA is requiring applicants, who have never participated in the program, or who are returning after a period of non-participation to provide their operations plan at the time they submit their application to participate in the WYO Program.

2. In Article II.D. (Commencement and Termination), FEMA is providing additional guidance on the transfer of data and documentation.

3. In Article II.F. (Commencement and Termination), FEMA is providing additional guidance for companies and will require notice from any company that is assigned a financial strength rating that is downgraded by an independent financial rating company during the period of participation in the Arrangement, or is unable to operate as a result of a State department of insurance order or directive, including those companies that are in receivership or run-off status. Furthermore, FEMA has added an immediate notice requirement for such companies.

4. In Article III.A. (Undertakings of the Company), FEMA is requiring WYO companies to have a live customer service agent in order to be more accessible to policyholders.

5. Removal of Reimbursement for Services of a National Rating Organization from Article IV.B.4.

The Fiscal Year 2023 Arrangement reads as follows:

Financial Assistance/Subsidy Arrangement

Article I. General Provisions

A. Parties. The parties to the Financial Assistance/Subsidy Arrangement are the Federal Emergency Management Agency (FEMA) and the Company.

B. Purpose. The purpose of this Financial Assistance/Subsidy Arrangement is to authorize the Company to sell and service flood insurance policies made available through the National Flood Insurance Program (NFIP) and adjust and pay claims arising under such policies as fiscal agents of the Federal Government.

C. Authority. This Financial Assistance/Subsidy Arrangement is authorized under the National Flood Insurance Act of 1968 (NFIA) (42 U.S.C. 4001 et seq.), and in particular, section 1345(a) of the NFIA (42 U.S.C. 4081(a)), as implemented by 44 CFR 62.23 and 62.24.

Article II. Commencement and Termination

A. The effective period of this Arrangement begins on October 1, 2022 and terminates no earlier than September 30, 2023, subject to extension pursuant to Articles II.D and II.H. FEMA may provide financial assistance only for policy applications and endorsements accepted by the Company during this period pursuant to the Program's effective date, underwriting, and eligibility rules.

B. Pursuant to 44 CFR 62.23(a), FEMA will publish the Arrangement and the terms for subscription or re-subscription for Fiscal Year 2024 in the Federal Register no later than April 1, 2023. Upon such publication, the Company must notify FEMA of its intent to re-subscribe or not re-subscribe to the WYO Program for the following term within ninety (90) calendar days.

C. Requesting Participation in WYO Program. Insurers interested in participating in the WYO Program, who have never participated in the program, or who are returning to the program after a period of non-participation, must submit a written request to participate.

1. Participation is then contingent on submission of both:

a. A completed application package, the requirements and contents of which FEMA will outline in its written response to the request to participate, and

b. A completed operations plan, whose requirements and contents are outlined at Article III.A.5 of this Arrangement.

2. Insurers who are already participating in the program must submit their operations plan within ninety (90) days as outlined in Article III.A.5 of this Arrangement.

D. In addition to the requirements of Article II.B, in order to ensure uninterrupted service to policyholders, the Company must notify FEMA within thirty (30) calendar days of when the Company elects not to re-subscribe to the WYO Program during the term of this Arrangement. If so notified, or if FEMA chooses not to renew the Company's participation, FEMA, at its option, may require the continued performance of all or selected elements of this Arrangement for the period required for orderly transfer or cessation of business and settlement of accounts, not to exceed eighteen (18) months after the end of this Arrangement (September 30, 2023), and may either require transfer of activities to FEMA under Article II.D.1 or allow transfer of activities to another WYO company under Article II.D.2:

1. FEMA may require the Company to transfer all activities under this Arrangement to FEMA. Within thirty (30) calendar days of FEMA's election of this option, the Company must deliver to FEMA the following:

a. A plan for the orderly transfer to FEMA of any continuing responsibilities in administering the policies issued by the Company under the Program including provisions for coordination assistance.

b. All data received, produced, and maintained through the life of the Company's participation in the Program, including certain data, as determined by FEMA, in a standard format and medium.

c. All claims and policy files, including those pertaining to receipts and disbursements that have occurred during the life of each policy. In the event of a transfer of the services provided, the Company must provide FEMA with a report showing, on a policy basis, any amounts due from or payable to policyholders, agents, brokers, and others as of the transition date.

d. All funds in its possession with respect to any policies transferred to FEMA for administration and the unearned expenses retained by the Company.

e. A point of contact within the Company responsible for addressing issues that may arise from the Company's previous participation under the WYO Program.

2. Within ninety (90) calendar days of receiving the Company's data and supporting documentation, FEMA will notify the Company of the date that FEMA will complete the transfer.

--This is a summary of a Federal Register article originally published on the page number listed below--

Notice.

Citation: "87 FR 16221"

Document Number: "Docket ID FEMA-2022-0004"

Federal Register Page Number: "16221"

"Notices"