How strict are all of you on the exact wording of the Compliance Aid Statement in a private flood policy? The rule doesn't state it has to be verbatim, but it also doesn't state that it can be similar to...all it says is, "Furthermore, the Agencies have revised the third proposed criterion to clarify that a regulated lending institution may determine that a policy meets the definition of “private flood insurance” without further review of the policy if the following statement is included within the policy or as an endorsement to the policy: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”"


The one we have in a policy we are reviewing states, "THIS POLICY MEETS ALL OF THE PROVISIONS REQUIRED BY: National Flood Insurance Act of 1968, as amended; and Flood Disaster Protection Act of 1973, as amended, 42 U.S.C. §4001 et seq.; including Biggert Waters Flood Insurance Reform Act of 2012, 42 U.S.C., §4012a"

I think this is unacceptable, and we need to review the full policy, but am curious as to what others of you would do in this instance.

The compliance aid statement (or compliance aid assurance clause per the proposed FAQs) must be the same as in the regulation. This is being clarified on the proposed private flood insurance FAQs.

MANDATORY 6. If a flood insurance policy issued by a private insurer includes the compliance aid assurance clause, does a lender need to conduct an additional review of the policy for compliance with the mandatory acceptance provision of the Regulation?
No, under the mandatory acceptance provision of the Regulation, if a policy or an endorsement to the policy contains the compliance aid assurance clause, further review is not necessary in order for the lender to determine that a policy meets the definition of “private flood insurance.”

It is important to note that, in order for the lender to rely on the compliance aid assurance clause without further review of the policy, the language of the compliance aid assurance clause must be stated in the policy, or as an endorsement to the policy, as set forth in the Regulation. If the language is different from the compliance aid assurance clause set forth in the Regulation, the lender cannot rely on the protections of the compliance aid assurance clause in the Regulation and should review the policy to determine if it meets the definition of private flood insurance. However, a policy containing the compliance aid assurance clause need not be rejected if there are stylistic differences, such as formatting, font, and punctuation that do not change the substantive meaning of the clause, from the compliance aid assurance clause included in the Regulation. See also Q&A Mandatory 7.