A demand by a House Financial Services subcommittee chairman that bank regulators move quickly to impose a rule requiring mortgage lenders to accept private flood insurance is prompting a split in the insurance industry.
The letter sent to federal bank regulators by Rep. Randy Neugebauer, R-Texas, said that the provision's intent "is to reaffirm and support pre-existing requirements that lenders accept comparable private flood insurance policies" as an alternative to policies offered by the National Flood Insurance Program.
He says, "I believe that once fully implemented, this provision will further encourage private-sector participation in the flood insurance market and reduce the risk to which the U.S. taxpayer is currently exposed.
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