Legal Q&A: Revised Flood Q&As Provide Banks with Expanded, Organized Resource

By Scott Birrenkott

Q: Have the Agencies Finalized Their Revised Flood Q&As?

A: Yes. The OCC, FRB, FDIC, FCA, and NUCA (agencies) have reorganized, revised, and expanded the Interagency Questions and Answers Regarding Flood Insurance (Revised Flood Q&A).

Flood matters continue to be a hot topic with the examiners, and the Revised Flood Q&As are a helpful tool in working through many of the issues associated with flood compliance. The agencies previously issued flood interpretations, but those resources were scattered and found within various guidance documents such as the 2009 and 2011 Q&As. The Revised Flood Q&As supersede and replace those resources by consolidating and updating them into a single document.

The Revised Flood Q&As are organized by category and broken down into numerical designations within their categories. The agencies plan to update and manage these categories accordingly in the future. As an example of the benefit of the Revised Flood Q&As, examiners have recently been reviewing cross-collateralization and contents coverage calculations. The new category labeled “Other Security Interests” includes helpful discussion regarding such matters. For example, “Other Security Interests 7” discusses when flood insurance is required on contents, including examples of how to calculate. Question 8 then discusses a situation in which the contents might be located in another building, and question 9 covers applicability to contents taken as an “abundance of caution.” WBA has recently received questions regarding when contents coverage is required, as well as how to calculate insurable value when contents is included. These updated Q&As are helpful in understanding how the regulators view such situations.

While the flood rules themselves have not changed, the Revised Flood Q&As have been updated for ease of use and remain an excellent resource to consult when faced with a flood question. For any questions on flood matters or other compliance, also consider reaching out to WBA legal at wbalegal@wisbank.com or 608-441-1200.