National Flood Insurance Program (NFIP): Assistance to Private Sector Property Insurers Availability of FY2008 and FY2009 Arrangements

Federal Register: August 7, 2008 (Volume 73, Number 153)

Notices

Page 46028

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr07au08-76

Page 46028

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

National Flood Insurance Program (NFIP); Assistance to Private

Sector Property Insurers, Availability of FY2008 and FY2009

Arrangements

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

SUMMARY: Each year the Federal Emergency Management Agency (FEMA) is required by the Write-Your-Own (WYO) program Financial Assistance/

Subsidy Arrangement (Arrangement) to notify the private insurance companies (Companies) and to make available to the Companies the terms for subscription or re-subscription to the Arrangement. In keeping with that requirement, this notice provides the terms to the Companies to subscribe or re-subscribe to the Arrangement.

FOR FURTHER INFORMATION CONTACT: Edward L. Connor, FEMA, 500 C Street,

SW., Washington, DC 20472, 202-646-3429 (phone), 202-646-3445

(facsimile), or Edward.Connor@dhs.gov (e-mail).

SUPPLEMENTARY INFORMATION: Under the Write-Your-Own (WYO) program

Financial Assistance/Subsidy Arrangement (Arrangement), approximately 90 private sector property insurers issue flood insurance policies and adjust flood insurance claims under their own names based on an

Arrangement with the Federal Insurance Administration (FIA) published at 44 CFR part 62, appendix A. The WYO insurers receive an expense allowance and remit the remaining premium to the Federal Government.

The Federal Government also pays WYO insurers for flood losses and pays loss adjustment expenses based on a fee schedule. In addition, under certain circumstances reimbursement for litigation costs, including court costs, attorney fees, judgments, and settlements, are paid by FIA based on documentation submitted by the WYO insurers. The complete

Arrangement is published in 44 CFR Part 62, appendix A. Each year FEMA is required to publish in the Federal Register and make available to the Companies the terms for subscription or re-subscription to the

Arrangement.

FEMA published a notice at 72 FR 41770, on July 31, 2007, that during September 2007, FEMA would send a copy of the offer for the

FY2008 Arrangement, together with related materials and submission instructions, to all private insurance companies participating under the current FY2007 Arrangement.

The FY2007 Arrangement was extended by FEMA into FY2008 pending publication of an Interim Rule and the release of new Schedules. The

Interim Rule published April 3, 2008 (73 FR 18182), and the revised

Schedules were finalized June 1, 2008.

The Interim Rule implemented changes to the Arrangement as follows: 1. Changes made address the WYO Companies' cooperation in helping ensure that agents writing flood insurance under the National Flood

Insurance Program (NFIP) avail themselves of the training opportunities needed to meet the minimum NFIP training requirements called for in section 207 of the Bunning-Bereuter-Blumenauer Flood Insurance Reform

Act of 2004, Public Law 108-264, 118 Stat. 727 (42 U.S.C. 4011 note). 2. In certain heavy loss years, the potential exists for the NFIP to exhaust its authority to borrow funds from the Treasury to pay claims. In such an event, there may be a period of time during which no funds are available in the Treasury until the Congress takes action to either increase the program's borrowing authority, or appropriate funds to relieve the debt. The Interim Rule revised 44 CFR part 62, appendix

A, Article VII, section A. to provide that in such circumstances, the

Federal Insurance Administrator will suspend the NFIP's payment of claims until funds are again available in the Treasury, and that the

WYO Companies are not required to pay claims from their own funds in the event of such a suspension. 3. FEMA revised 44 CFR part 62, appendix A, Article III, section

C.1. of the Arrangement which deals with the Unallocated Loss

Adjustment Expense (ULAE) for which WYO Companies receive reimbursement under the Arrangement. The ULAE rate used to be an expense reimbursement of 3.3 percent of the incurred loss (except that it did not include ``incurred but not reported''). The IR removed the ULAE compensation percentage from the Arrangement. Instead, the percentage is now communicated by FEMA to the WYO Companies through an ULAE

Schedule.

The only changes to the FY2008 Arrangement were those that were implemented in the April 3, 2008 Interim Rule. No changes are planned for the FY2009 Arrangement.

During August 2008, FEMA will send a copy of the offer for the

FY2009 Arrangement, together with related materials and submission instructions, to all private insurance companies participating under the current FY2008 Arrangement. Any private insurance company not currently participating in the WYO Program but wishing to consider

FEMA's offer for either FY2008 or FY2009 may request a copy by writing:

Federal Emergency Management Agency, Mitigation Division, Attn: WYO

Program, 500 C Street, SW., Washington, DC 20472, or contact Edward

Connor at 202-646-3445 (Facsimile), or Edward.Connor@dhs.gov (e-mail).

Dated: August 1, 2008.

Michael Buckley.

Deputy Assistant Administrator, National Flood Insurance Program,

Federal Emergency Management Agency, Department of Homeland Security.

FR Doc. E8-18242 Filed 8-6-08; 8:45 am

BILLING CODE 9110-11-P