Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Notices   pg. 52117

DEPARTMENT OF HOMELAND
SECURITY
Federal Emergency Management
Agency
RIN 1660ZA06
Flood Insurance Training and
Education Requirements for Insurance
Agents
AGENCY: Federal Emergency
Management Agency (FEMA),
Emergency Preparedness and Response
Directorate, Department of Homeland
Security.
ACTION: Notice.

SUMMARY: FEMA is publishing
minimum training and education
requirements, as required by section 207
of the Flood Insurance Reform Act of
2004, for all insurance agents who sell
Standard Flood Insurance Policies
issued through the National Flood
Insurance Program (NFIP).
FOR FURTHER INFORMATION CONTACT: Mr.
Edward L. Connor, Federal Emergency
Management Agency, Mitigation
Division, 500 C Street, SW.,
Washington, DC 20472, (202) 6463429
(phone), (202) 6462849 (facsimile), or
Edward.Connor@dhs.gov (e-mail).
SUPPLEMENTARY INFORMATION: On June
30, 2004 the President signed the
Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 2004 (Flood
Insurance Reform Act of 2004), Pub. L.
108264. Section 207 of the Flood
Insurance Reform Act of 2004 states:
The Director of the Federal Emergency
Management Agency shall, in cooperation
with the insurance industry, State insurance
regulators, and other interested parties
(1) Establish minimum training and
education requirements for all insurance
agents who sell flood insurance policies, and
(2) Not later than 6 months after the date
of enactment of this Act, publish these
requirements in the Federal Register, and
inform insurance companies and agents of
the requirements.
This notice describes FEMAs
implementation of section 207 of the
Flood Insurance Reform Act of 2004. As
required by the Act, FEMA has
coordinated with the State insurance
regulators, the insurance industry, and
other interested parties. Input received
from these organizations emphasizes the
value of working through the State
insurance departments to avoid
establishing conflicting or burdensome
training requirements upon insurance
agents. While implementing the
minimum training requirements
required by section 207, FEMA has been
mindful of the Senate Report language,
(S. REP. NO. 108262, at 4 & 9 (2004)),
which cautions:
In some cases, states may already have
requirements to ensure that agents are wellversed
in the flood insurance program.
Where possible, FEMA should work to make
sure that agents are not burdened with
inconsistent state and federal training and
education requirements. In addition, where
possible, FEMA should work to implement
the training requirements through the states,
which already have continuing education
processes in place.
Under 15 U.S.C. 1011 et seq.,
commonly referred to as the McCarran-
Ferguson Act, section 6701, States
have the authority to establish
qualification standards by which
insurance agents are licensed to do
business and to determine the
continuing education requirements for
maintaining such licenses in the
particular jurisdiction. However, the
McCarran-Ferguson Act specifically
excludes from State regulation an
insurance program carried out by the
Federal Government, including the
NFIP, and FEMA lawfully may establish
specific standards to sell flood
insurance under the NFIP. Rather than
establish separate, and, perhaps
duplicative requirements, FEMA has
chosen to work with States to ensure
that NFIP requirements are
implemented through established
(existing) licensing schemes. For
example, several States already include
questions about flood insurance on their
agent licensing examinations, and some
also award continuing education credits
for agents who complete flood insurance
training. It is our intent to encourage
States to implement minimum training
in NFIP flood insurance as part of their
general licensing standards and to assist
States in improving their training and
testing of agents on flood insurance
matters as appropriate.
FEMA is committed to actively
supporting the States in implementing
their flood insurance training programs
for insurance agents and will, in support
of that commitment, provide: expertise
regarding the content of a flood
insurance training program that would
enable insurance agents to have a basic
understanding of the NFIP; access to
NFIP training modules, including online
modules; and, NFIP materials and other
technical assistance as may be needed to
address unique requirements. Further,
as FEMA establishes policy or
procedural changes or enhancements
that should be reflected in Stateapproved
flood insurance training
programs, these will be provided by
FEMA to the State insurance
departments.
FEMA will work with State insurance
departments that do not already have
established flood insurance training
programs for insurance agents to
implement the guidance provided by
the National Conference of Insurance
Legislators (NCOIL). The State Flood
Disaster Mitigation and Relief Model
Act adopted by the NCOIL Executive
Committee on November 21, 2003,
includes the following text that States
will find useful when adopting their
flood insurance requirements:
Part IV. Miscellaneous Provisions Regarding
Participation
Sec. 1. Insurance Producer Qualification;
Continuing Education
The [State entity for regulating insurance]
shall require:
1. Pre-licensing requirement. The [State
entity for regulating insurance] shall require
all resident insurance producer applicants to
demonstrate satisfactory knowledge and
understanding of flood insurance and the
National Flood Insurance Program, as
determined by the [State entity for regulating
insurance] in order to qualify for licensure.
2. One-time continuing education
requirement for existing licensees. The [State
entity for regulating insurance] shall require
resident insurance producers licensed on [the
bills effective date] to complete a continuing
education course related to flood insurance
and the National Flood Insurance Program
before [a date certain at least two years from
the bills effective date]. The course shall be
three hours in length and shall be approved
by the [State entity for regulating insurance].
Completion of the course will provide the
licensee with three hours of continuing
education credit.
Incentives for Trained Agents
FEMA offers various incentives to
encourage insurance agents to pursue
flood insurance training. The NFIPs
Agent Co-op Program provides agents,
Write Your Own (WYO) companies, and
insurance associations with the
advertising tools they need to produce
local and regional advertising that
supports the national NFIP campaign.
Insurance agents who participate in the
program are reimbursed a portion of
their advertising budget when they use
the programs pre-approved ad
templates. An additional 25 percent in
co-op funds are offered to agents who
complete a State-approved continuing
education course on flood insurance
within the past 12 months. Details are
provided at http://www.FloodSmart.gov.
Additionally, agents who sign up for
the NFIPs Agent Leads Referral
program receive free leads generated
through the NFIP marketing efforts.
Plans are being developed to enable
agents who have completed flood
insurance training to be given a special
designation or priority in the
distribution of leads.
Flood Insurance Course Content
The following material outlines the
standard content that States should
include when establishing or updating
their flood insurance training
requirements. This outline reflects input
gathered by FEMA from the following:
State insurance regulators; insurance
companies that sell flood insurance
under the NFIPs WYO Program; the
Independent Insurance Agents and
Brokers of America; the National
Association of Professional Insurance
Agents; and the Coalition of Exclusive
Agent Associations. This training course
content, if effectively delivered, would
enable insurance agents to gain a basic
understanding of the NFIP, so that they
could share this information with their
customers. Additional training should
be taken by insurance agents on a
regular basis to gain understanding of
more advanced flood insurance topics.
Basic Flood Insurance Course Outline
Section IIntroduction
 NFIP Background
 Community Participation
 Emergency Program Defined
 Regular Program Defined
 Community Rating System
 Eligible/Ineligible Buildings
 Coastal Barrier Resources System
and Other Protected Areas
 Who Needs Flood Insurance?
 Mandatory Purchase of Flood
Insurance in High Flood Risk Zones
 Recommended in Moderate and
Low Flood Risk Zones
 Why Flood Insurance is Better than
Disaster Assistance
Section IIFlood Maps and Zone
Determinations
 Flood Hazard Boundary Map
(FHBM)
 Flood Insurance Rate Map (FIRM)
 Pre-FIRM/Post-FIRM Defined
 Special Flood Hazard Area Defined
 Base Flood Elevation
 Zone Determination
Section IIIPolicies and Products
Available
 Dwelling PolicyTypes of
Buildings Covered
 General Property PolicyTypes of
Buildings Covered
 Residential Condominium Building
Association (RCBAP) PolicyTypes of
Buildings Covered
 Preferred Risk PolicyTypes of
Buildings Covered
 Definitions:
 Flood
 Basement/Enclosure
 Elevated Buildings
 Damages Not Covered
 Single Peril Policy
 Mudslides vs. Mudflow
 Property Covered
 Basements
 Appurtenant Structure
 Loss Avoidance Measures
 Debris Removal
 Improvements and Betterments
 Property Not Covered
 Decks
 Finished Items in Basements
 In Enclosures
 Additional Living Expenses
 Increased Cost of Compliance
Coverage
Section IVGeneral Rules
 Statutory Coverage Limits
 Deductibles
 Standard Deductibles
 Applies Separately for Building and
Contents
 Property Value Determination for
Selecting Coverage Amount
 Loss Settlement
 Actual Cash Value (ACV)
 Replacement Cost Value (RCV)
 Co-insurance Penalty in RCBAP
 Reduction and Reformation of
Coverage
 No Binders
 One Building per PolicyNo
Blanket Coverage
 Building and Contents Coverage
Purchased Separately
 Waiting Period/Effective Date of
Policy
 Policy Term
 Cancellations
Section VRating
 Types of Buildings
 Elevated Buildings
 Buildings with Basements
 When to Use an Elevation
Certificate
 Grandfathering
Section VIClaims Handling Process
 Helping Your Client to File a Claim
 Appeals Process
 Claims Handbook
Section VIIRequirements of the Flood
Insurance Reform Act of 2004
 Point of Sale and Renewal
Responsibilities
 Notification of Coverages Being
Purchased
 Policy Exclusions that Apply
 Explanation Regarding How Losses
Will be Adjusted (ACV vs. RCV)
 Number and Dollar Amount of
Claims for Property
 Acknowledgement Forms
Section VIIIAgent Resources
 Write Your Own Company
 FEMA Web sites:
 http://www.fema.gov/nfip
 http://www.floodsmart.gov
 http://training.nfipstat.com
 Flood Insurance Manual
Dated: August 25, 2005.
Michael D. Brown,
Under Secretary, Emergency Preparedness
and Response, Department of Homeland
Security.
[FR Doc. 0517444 Filed 83105; 8:45 am]
BILLING CODE 911011P