Yes, the flood insurance rules continue to require approval from your primary federal regulator before accepting a plan issued by a mutual aid society for flood insurance. As noted in the supplementary information for the final rule on private flood insurance, the FDIC expects its approval of mutual aid society plans will be “rare and limited” (unlike the OCC and Farm Credit Administration, both of which permit the acceptance of flood coverage issued by mutual aid societies, such as Amish Aid Plans). To our knowledge, the FDIC has not issued guidance on the approval process.
For resources related to our guidance, please see:
- 12 CFR 339.3(c)(4) (“An FDIC-supervised institution may accept a plan issued by a mutual aid society, as defined in § 339.2, in satisfaction of the flood insurance purchase requirement in paragraph (a) of this section if:
(i) The FDIC has determined that such plans qualify as flood insurance for purposes of the Act;
(ii) The plan provides coverage in the amount required by paragraph (a) of this section;
(iii) The plan covers both the mortgagor(s) and the mortgagee(s) as loss payees; and
(iv) The plan provides sufficient protection of the designated loan, consistent with general safety and soundness principles, and the FDIC-supervised institution documents its conclusion regarding sufficiency of the protection of the loan in writing.”)
- 12 CFR 339.2 (“Mutual aid society means an organization –
(1) Whose members share a common religious, charitable, educational, or fraternal bond;
(2) That covers losses caused by damage to members' property pursuant to an agreement, including damage caused by flooding, in accordance with this common bond; and
(3) That has a demonstrated history of fulfilling the terms of agreements to cover losses to members' property caused by flooding.”)
- Final Rule, Loans in Areas Having Special Flood Hazards, 84 Fed. Reg. 4953, 4963 (February 20, 2019) (“Based on their current practices regarding non-traditional flood insurance, the Board, FDIC, and NCUA expect that cases in which they approve policies issued by mutual aid societies will be rare and limited.”)
- Final Rule, Loans in Areas Having Special Flood Hazards, 84 Fed. Reg. 4953, footnote 34 (February 20, 2019) (“The OCC notes that it currently permits national banks and Federal savings associations to accept mutual aid society plans, such as plans issued by the Amish, in satisfaction of the flood insurance purchase requirement. The FCA also permits its System institutions to accept this coverage. Such plans are written agreements issued by members of a community who share a common religious bond and have a demonstrated history of covering losses to members’ property caused by flooding in accordance with this common bond, either by paying to cover the cost of damaged structures or by repairing or rebuilding the structures. Accordingly, the OCC and FCA believe that such plans provide sufficient protection of a loan secured by the property, protect the institution as well as the borrower, and are issued by an organization that meets the definition of ‘mutual aid society’ included in the final rule. Therefore, the final rule maintains the status quo by continuing to allow national banks, Federal savings associations, and Farm Credit System institutions to accept flood coverage issued by mutual aid societies, such as Amish Aid Plans.”)
- Consumer Compliance Outlook, Transcript of 2019 Interagency Flood Insurance Update on Private Flood Insurance Rule (June 19, 2019), page 17 (“Since the final rule was issued, the FDIC has been considering our policy for mutual aid society flood plans. We are still evaluating how we will implement the mutual aid society provision of the final rule.”)