44 Cfr 62.24

§ 62.24

44 CFR Ch. I (10–1–11 Edition)

advise as to the option for obtaining
less costly flood insurance; and
(vi) Advise that a MPPP policy will
be purchased by the lender if evidence
of flood insurance coverage is not received by a date certain.
(5) The second notification letter
must remind the mortgagor of the previous notice and provide essentially
the same information.
(6) The final notification letter must:
(i) Enclose a copy of the flood insurance policy purchased under the MPPP
on the mortgagor’s (insured’s) behalf,
together with the Declarations Page,
(ii) Advise that the policy was purchased because of the failure to respond to the previous notices, and
(iii) Remind the insured that similar
coverage may be available at significantly lower cost and advise that the
policy can be cancelled at any time
during the policy year and a pro rata
refund provided for the unearned portion of the premium in the event the
insured purchases another policy that
is acceptable to satisfy the requirements of the 1973 Act.
[61 FR 51219, Oct. 1, 1996, as amended at 64 FR
56176, Oct. 18, 1999; 67 FR 13549, Mar. 22, 2002;
69 FR 45610, July 30, 2004; 74 FR 15341, Apr. 3,
2009]

§ 62.24 WYO participation criteria.
New companies or organizations eligible for the pilot project we describe
in paragraph (b) of this section that
seek to participate in the WYO program, as well as former WYO companies seeking to return to the WYO program, must meet standards for financial capability and stability for statistical and financial reporting and for
commitment to program objectives.
(a) To demonstrate the ability to
meet the financial requirements, a private insurance company wishing to
enter or reenter the WYO program
must:
(1) Be a licensed property insurance
company;
(2) Have a five (5) year history of
writing property insurance;
(3) Disclose any legal proceedings,
suspensions, judgments, settlements,
or agreements reached with any State
insurance department, State attorney
general, State corporation commission,
or the Federal Government during the

immediately prior five (5) years regarding the company’s business practices;
(4) Submit its most recent National
Association of Insurance Commissioners (NAIC) annual statement;
(5) Submit information, as data become available, to indicate that the
company meets or exceeds NAIC standards for risk-based capital and surplus;
and
(6) Submit its last State or regional
audit, which should contain no material negative findings.
(b) To demonstrate the ability to
meet the financial requirements, a
public entity risk-sharing organization, an association of local governments, a State association of political
subdivisions, a State-sponsored municipal league, and any other intergovernmental risk-sharing pool for covering
public entity structures, wishing to
enter the WYO program, which will end
September 30, 2004, must:
(1) Have authority by a State to provide property coverage to its members;
(2) Have a five (5) year history of
writing property coverage;
(3) Disclose any legal proceedings,
suspensions, judgments, settlements,
or agreements reached with any State
insurance department, State attorney
general, State corporation commission,
or the Federal Government during the
immediately prior five (5) years regarding the other insurer’s business practices; and
(4) Submit its most recent two annual audits from an independent accounting firm performed in compliance
with generally accepted accounting
principles that show no material negative findings; and submit, as data become available, information to indicate that the other insurer meets or
exceeds standards comparable to those
of the NAIC for risk-based capital and
surplus.
(c) An applicant for entry or reentry
in the WYO program must also pass a
test to determine the applicant’s ability to process flood insurance and meet
the Transaction Record Reporting and
Processing (TRRP) Plan requirements
of the WYO Financial Control Plan.
Unless the test requirement is waived,
e.g., where an already qualified performer will fulfill the applicant’s reporting requirements, the applicant

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Federal Emergency Management Agency, DHS
must prepare and submit test output
monthly tape(s) and monthly financial
statements and reconciliations for
processing by the NFIP Bureau and
Statistical Agent contractor. For test
purposes, no error tolerance will be allowed. If the applicant fails the initial
test, a second test will be run, which
the applicant must pass to participate
in the Program.
(d) To satisfy the requirement for
commitment to Program goals, including marketing of flood insurance policies, the applicant will submit information concerning its plans for the
WYO Program including plans for the
training and support of producers and
staff, marketing plans and sales targets, and claims handling and disaster
response plans. Applicants must also
identify those aspects of their planned
flood insurance operations to be performed by another organization, managing agent, another WYO Company, a
WYO vendor, a service bureau or related organization. Applicants will also
name, in addition to a Principal Coordinator, a corporate officer point of
contact—an individual, e.g., at the
level of Senior Executive Vice President, who reports directly to the Chief
Executive Officer or the Chief Operating Officer. Each applicant shall furnish the latest available information
regarding the number of its fire, allied
lines, farm-owners multiple peril,
homeowners multiple peril, and commercial multiple peril policies or coverage documents in force, by line. A
private insurance company applying
for participation in the WYO program
shall also furnish its Best’s Financial
Size Category for the purpose of setting marketing goals.
[67 FR 13550, Mar. 22, 2002]

APPENDIX A TO PART 62—FEDERAL
EMERGENCY MANAGEMENT AGENCY,
FEDERAL INSURANCE ADMINISTRATION, FINANCIAL ASSISTANCE/SUBSIDY ARRANGEMENT
Purpose: To assist the company in underwriting flood insurance using the Standard
Flood Insurance Policy.
Accounting Data: Pursuant to Section 1310
of the Act, a Letter of Credit shall be issued
for payment as provided for herein from the
National Flood Insurance Fund.
Effective Date: October 1, 2004.

Pt. 62, App. A

Issued By: Federal Emergency Management
Agency, Federal Insurance Administration,
Washington, DC 20472.
ARTICLE I—FINDINGS, PURPOSE, AND
AUTHORITY
Whereas, the Congress in its ‘‘Finding and
Declaration of Purpose’’ in the National
Flood Insurance Act of 1968, 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 Insurance Administration (FIA) within the Mitigation Division
recognizes this Arrangement as coming
under the provisions of Section 1345 of the
Act (42 U.S.C. 4081); and
Whereas, the goal of the FIA is to develop
a program with the insurance industry
where, over time, some 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, the insurer (hereinafter the
‘‘Company’’) under this Arrangement shall
charge rates established by the FIA; and
Whereas, FIA has promulgated regulations
and guidance implementing the Act and the
Write-Your-Own 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 or FIA
arises under the Act, regulations, or FIA
guidance, 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, this Arrangement has been developed 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 structures at risk and
because the insurance industry has marketing access through its existing facilities
not directly available to the FIA, it has been
concluded 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 shall be only
that insurance written by the Company in
its own name under prescribed policy conditions and pursuant to this Arrangement and
the Act; and

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