WASHINGTON — Federal regulators have released an updated and expanded guidance on flood insurance, concluding a regulatory process that began with the Biggert-Waters Flood Insurance Reform Act in 2012.
The
Notably, the new guidance dodges the question of how climate change should be factored into flood insurance decisions. The document neither gives insurers a “safe harbor” for insurers to decline coverage based on climate change concerns nor explicitly requires insurers to consider climate risks and make flood insurance mandatory in high-risk zones, as urged by one comment received by regulators. Instead, the agencies decided those questions must be settled by the agencies through separate rules.
“Climate change risk is outside the scope of the Agencies’ Interagency Questions and Answers,” the guidance says. “The Agencies note that they are working individually and on an interagency basis to address financial risks associated with climate change consistent with the agencies’ regulatory and supervisory authorities.”
Flood insurance policy is often seen as one of the
In response to pressure from the banking industry, the regulators specified that their document is meant to be guidance, and that falling short of the guidance isn’t grounds for supervisory action.
“The Agencies confirm that the Agencies are providing the Interagency Questions and Answers as guidance only,” the guidance says.
In a comment letter to regulators last year, the American Bankers Association, the Mortgage Bankers Association, the Independent Community Bankers of America and other trade groups wrote to regulators asking for a
The guidance also addresses what it calls significant changes to flood insurance laws in the last decade, including escrow of flood insurance exemptions, exemptions for detached structures and the acceptance of flood insurance policies by private insurers.
