June 1 marked the start of hurricane season, and according to the National Oceanic and Atmospheric Administration (NOAA), the Atlantic hurricane season will be a busy one. NOAA predicts a 60% chance of an above-normal season, a 30% chance of a near-normal season and only a 10% chance of a below-normal season. Since June 1, there have already been three named storms in the Atlantic, two of which made landfall and caused flooding.
Flooding is the most common and costly natural disaster in the United States. As a result, state agencies and news outlets are reminding consumers about the importance of flood insurance. The combined cost of the Missouri, Arkansas, and Mississippi river flooding ($20 billion) alone was almost half of the total cost ($45 billion) of weather and climate disaster events in the United States in 2019.
For homeowners who have yet to renew their flood insurance, it may not be too late. At the end of March, due to COVID-19, the Federal Emergency Management Association (FEMA) extended the grace period for flood insurance renewal premiums from 30 to 120 days. The extension applies to National Flood Insurance Program (NFIP) policies, whether issued by NFIP Direct or a Write Your Own company, with an expiration date between February 13-June 15, 2020.
In response to these extensions by FEMA, the Office of Comptroller of the Currency (OCC) announced that it “does not expect to take supervisory or enforcement action against a bank for reasonable delays in complying with the [flood insurance force placement] requirements of 12 CFR 22.7 in connection with the 120-day grace period, provided that the bank made good faith efforts to support borrowers and comply with the force placement requirements, as well as responded to any needed corrective action identified in supervisory feedback.”
As the United States makes its way through hurricane season and beyond, we will continue to monitor the effect of these changes, as well as any new developments, and their impact on lenders and policyholders.