National Flood Insurance Program (NFIP); Assistance to Private Sector Property Insurers, Notice of FY 2018 Arrangement

SUMMARY: The Federal Emergency Management Agency announces the Fiscal Year 2018 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 July 6, 2017.

FOR FURTHER INFORMATION CONTACT: Kelly Bronowicz, Federal Insurance and Mitigation Administration, FEMA, 400 C St. SW., Washington, DC 20472; (202) 557-9488 (phone), or [email protected] (email).

SUPPLEMENTARY INFORMATION: The National Flood Insurance Act of 1968 (NFIA), as amended (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 insurance against loss resulting from physical damage to or loss of real or personal property arising from flood in the United States. See 42 U.S.C. 4011(a). Under the NFIA, FEMA has the authority to undertake arrangements to carry out the NFIP through the facilities of the Federal government, utilizing, for the purposes of providing flood insurance coverage, insurance companies and other insurers, insurance agents and brokers, and insurance adjustment organizations, as fiscal agents of the United States. See 42 U.S.C. 4071. To this end, FEMA is authorized to "enter into any contracts, agreements, or other arrangements" with private insurance companies to utilize their facilities and services in administering the NFIP, and on such terms and conditions as may be agreed 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).

II. Notice of Availability

Insurers interested in participating in the WYO Program for Fiscal Year 2018 must contact Clark Poland at [email protected] by July 6, 2017. /1/

FOOTNOTE 1 Article V.B of the FY 2017 Arrangement requires current WYO companies to notify FEMA of their "intent to re-subscribe or not re-subscribe" to the WYO Program within 30 days of FEMA publishing the terms of subscription or re-subscription in the Federal Register . This notice constitutes publication of the terms subscription for the purpsoses of Article V.B. However, FEMA is extending the deadline for current WYO companies to notify FEMA of their intent to re-subscribe or not re-subscribe to the Arrangment to July 6, 2017. END FOOTNOTE

Prior participation in the WYO Program does not guarantee that 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 2018 Arrangement, copied below. Private insurance companies are encouraged 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 2018 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 2017 Arrangement for a period required for orderly transfer or cessation of the business and settlement of accounts, not to exceed 18 months. See FY 2017 Arrangement, Article V.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: Kelly Bronowicz, Federal Insurance and Mitigation Administration, FEMA, 400 C St. SW., Washington, DC 20472 (mail); (202) 557-9488 (phone), or [email protected] (email).

III. Fiscal Year 2018 Arrangement

Pursuant to 44 CFR 62.23(a), FEMA must publish the Arrangement at least 6 months prior to the Arrangement becoming effective. The FY 2018 Arrangement copied below is substantially similar to the previous year's Arrangement. FEMA has made several changes designed to improve the overall clarity and readability of the document, as well as incorporate existing WYO Program policies and requirements. Noteworthy changes include:

* Inclusion of the NFIP Federal Insurance Directorate's mission statement in Article I;

* Clear references to important guidance documents, such as the Financial Control Plan, the Transaction Record Reporting and Processing (TRRP) Plan, the Flood Insurance Manual, and the Adjuster Claims Manual;

* Authorization for FEMA to require WYO companies to collect customer service information to monitor and improve program delivery (Article II.F.3);

* Inclusion of existing WYO company requirements for an appeals process (Article II.G);

* Removal of the Single Adjuster Program;

* Updated legal citations;

* Authorization for FEMA to provide WYO companies with a statistical summary of their individual performance in comparison with other WYO companies and NFIP Direct (Article IV.D);

* Modification of commencement and termination processes in response to removing the Arrangement from the CFR, See 81 FR 84483, Nov. 23, 2016 (Article V.A-B);

* Numerous stylistic changes designed to improve overall clarity and readability in accordance with Federal Plain Language Guidelines.

The Fiscal Year 2018 Arrangement reads as follows:

Financial Assistance/Subsidy Arrangement

Article I. Findings, Purposes, and Authority

Whereas, the Congress in its "Finding and Declaration of Purpose" in the National Flood Insurance Act of 1968, Public Law 90-448, Title XIII, as amended, ("the Act" or "Act") recognized the benefit of having the National Flood Insurance Program (the "Program" or "NFIP") "carried out to the maximum extent practicable by the private insurance industry"; and

Whereas, the Federal Emergency Management Agency ("FEMA"), which operates the Program through its Federal Insurance and Mitigation Administration ("FIMA"), recognizes this Arrangement as coming under the provisions of Sections 1340 and 1345 of the Act (42 U.S.C. 4071 and 4081, respectively); and

Whereas, the goal of FEMA is to develop a program with the insurance industry where the risk-bearing role for the industry will evolve as intended by the Congress (Section 1304 of the Act [42 U.S.C. 4011]); and

Whereas, Section 205 of the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004, Public Law 108-264, as implemented by 44 CFR 62.20, permits Program policyholders to appeal the denial of a claim, in completely or in part, to FEMA; and

Whereas, the NFIP is a program administered by FEMA, all participants of this Arrangement, and other entities operating on their behalf, shall align themselves toward the common purpose of helping survivors and their communities recover from floods by effectively delivering customer-focused flood insurance products and information; and

Whereas, the insurer (hereinafter the "Company") under this Arrangement must charge rates established by FEMA; and

Whereas, FEMA has promulgated regulations and guidance implementing the Act and the Write Your Own (WYO) Program whereby participating private insurance companies act in a fiduciary capacity utilizing Federal funds to sell and administer the Standard Flood Insurance Policies, and has extensively regulated the participating companies' activities when selling or administering the Standard Flood Insurance Policies; and

Whereas, any litigation resulting from, related to, or arising from the Company's compliance with the written standards, procedures, and guidance issued by FEMA arises under the Act or regulations, and legal issues thereunder raise a Federal question; and

Whereas, through this Arrangement, the Federal Treasury will back all flood policy claim payments by the Company; and

Whereas, FEMA developed this Arrangement to enable any interested qualified insurer to write flood insurance under its own name; and

Whereas, one of the primary objectives of the Program is to provide coverage to the maximum number of buildings at risk and because the insurance industry has marketing access through its existing facilities not directly available to FEMA, FEMA concludes that coverage will be extended to those who would not otherwise be insured under the Program; and

Whereas, flood insurance policies issued subject to this Arrangement must be only that insurance written by the Company in its own name under prescribed policy conditions and pursuant to this Arrangement, the Act, and any guidance issued by FEMA; and

Whereas, over time, the Program is designed to increase industry participation, and, accordingly, reduce or eliminate Government as the principal vehicle for delivering flood insurance to the public; and

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

Notice.

Citation: "82 FR 17017"

Document Number: "Docket ID FEMA-2017-2012"

Federal Register Page Number: "17017"

"Notices"