Best's Review



Regulatory Update
Flood Insurance

New developments with the National Flood Insurance Program and the North American Free Trade Agreement.
  • November 2018
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The Federal Emergency Management Agency has reduced the National Flood Insurance Program's Write-Your-Own compensation rate and rescinded the WYO non-compete clause, which will allow NFIP participating carriers to sell private flood insurance.

The new rules kicked in at the start of the 2019 fiscal year on Oct. 1. The WYO compensation rate is not set in statute, and FEMA is authorized to change the rate without congressional approval. Likewise with the non-compete clause, which was dropped in favor of growing the private flood market. The current WYO rate, of 31%, is calculated by aggregating premiums and expense amounts from five non-flood property lines and adding a 1.0% allowance. The rule removes that 1.0% allowance.


The updated North American Free Trade Agreement includes new prohibitions on data storage requirements that would protect the cross-border flow of information and benefit globally active insurers, trade representatives said.

The NAFTA replacement, called the United States-Mexico-Canada Agreement, recently reached a consensus after more than a year of talks. It still has to be ratified. For the first time in any U.S. trade agreement, negotiators included a prohibition on local data storage requirements where a financial regulator has the access to data that it needs to fulfill its supervisory mandate, according to a fact sheet posted on the website of the U.S. Trade Representative Robert Lighthizer.

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