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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Notices]
[Pages 3891-3899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00511]

[[Page 3891]]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

National Flood Insurance Program (NFIP); Assistance to Private 
Sector Property Insurers, Notice of FY 2026 Arrangement

AGENCY: Federal Emergency Management Agency, Department of Homeland 
Security.

ACTION: Notice.

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SUMMARY: The Federal Emergency Management Agency announces the Fiscal 
Year 2026 Financial Assistance/Subsidy Arrangement for private property 
insurers interested in participating in the National Flood Insurance 
Program's Write Your Own Program.

DATES: Interested insurers must submit intent to subscribe or re-
subscribe to the Arrangement by May 15, 2025.

FOR FURTHER INFORMATION CONTACT: Karolyn Kiss, Federal Insurance 
Directorate (FID), Resilience FEMA, 400 C St. SW, Washington, DC 20472 
(mail); (202) 646-3140 (phone); or [email protected] (email).

SUPPLEMENTARY INFORMATION:

I. Background

    The National Flood Insurance Act of 1968 (NFIA) (42 U.S.C. 4001 et 
seq.) authorizes the Administrator of the Federal Emergency Management 
Agency (FEMA) to establish and carry out a National Flood Insurance 
Program (NFIP) to enable interested persons to purchase flood 
insurance. See 42 U.S.C. 4011(a). Under the NFIA, FEMA may use 
insurance companies and other insurers, insurance agents and brokers, 
and insurance adjustment organizations as fiscal agents of the United 
States to help it carry out the NFIP. See 42 U.S.C. 4071. To this end, 
FEMA may ``enter into any contracts, agreements, or other appropriate 
arrangements'' with private insurance companies to use their facilities 
and services in administering the NFIP on such terms and conditions as 
they agree upon. See 42 U.S.C. 4081(a).
    Pursuant to this authority, FEMA enters into a standard Financial 
Assistance/Subsidy Arrangement (Arrangement) with private sector 
property insurers, also known as Write Your Own (WYO) companies, to 
sell NFIP flood insurance policies under their own names and adjust and 
pay claims arising under the Standard Flood Insurance Policy (SFIP). 
Each Arrangement entered into by a WYO company must be in the form and 
substance of the standard Arrangement, a copy of which is published in 
the Federal Register annually, at least 6 months prior to becoming 
effective. See 44 CFR 62.23(a). To learn more about FEMA's WYO Program, 
please visit https://nfipservices.floodsmart.gov/write-your-own-program.

II. Notice of Availability

    Insurers interested in participating in the WYO Program for Fiscal 
Year 2026 must contact Karolyn Kiss at [email protected] by May 
15, 2025.
    Prior participation in the WYO Program does not guarantee FEMA will 
approve continued participation. FEMA will evaluate requests to 
participate in light of publicly available information, industry 
performance data, and other criteria listed in 44 CFR 62.24 and the FY 
2026 Arrangement, copied below. FEMA encourages private insurance 
companies to supplement this information with customer satisfaction 
surveys, industry awards or recognition, or other objective performance 
data. In addition, private insurance companies should work with their 
vendors and other service providers involved in servicing and 
delivering their insurance lines to ensure FEMA receives the 
information necessary to effectively evaluate the criteria set forth in 
its regulations.
    FEMA will send a copy of the offer for the FY 2026 Arrangement, 
together with related materials and submission instructions, to all 
private insurance companies successfully evaluated by the NFIP. If 
FEMA, after conducting its evaluation, chooses not to renew a Company's 
participation, FEMA, at its option, may require the continued 
performance of all or selected elements of the FY 2025 Arrangement for 
a period required for orderly transfer or cessation of the business and 
settlement of accounts, not to exceed forty-eight (48) months. See FY 
2025 Arrangement, Article II.D. All evaluations, whether successful or 
unsuccessful, will inform both an overall assessment of the WYO Program 
and any potential changes FEMA may consider regarding the Arrangement 
in future fiscal years.
    Any private insurance company with questions may contact FEMA at: 
Karolyn Kiss, Federal Insurance Directorate, Resilience, FEMA, 400 C 
St. SW, Washington, DC 20472 (mail); (202) 646-3140 (phone); or 
[email protected] (email).

III. Fiscal Year 2026 Arrangement

    Pursuant to 44 CFR 62.23(a), FEMA must publish the Arrangement at 
least six months prior to the Arrangement becoming effective. The FY 
2026 Arrangement provided below is substantially similar to the 
previous year's Arrangement, but includes the following changes:
    1. For clarity, throughout the Arrangement, FEMA is making minor 
changes by adding ``insurance'' before ``agents'' to clarify the type 
of ``agent'' when referring to licensed insurance professionals that 
sell property and flood insurance and have an agency contract with the 
Company, distinguishing the term from other types of ``agents'' 
referred to in the Arrangement (e.g., ``fiscal agent,'' ``customer 
service agents'' and ``direct servicing agent'').
    2. For clarity, throughout the Arrangement, FEMA is substituting 
all references to ``the Act'' with the ``NFIA,'' as abbreviated in 
Article I.C.
    3. In Article I.A, FEMA is deleting ``(as defined at III.N)'' 
because a definition section is proposed in new Article I.D.
    4. In new Article I.D, FEMA is adding definitions for the terms 
``Service Provider,'' ``Vendor'' and ``Contractor,'' as they are used 
throughout the Arrangement.
    5. In Article II.D.4.c, FEMA is deleting ``[i]n the event of a 
transfer of services provided'' for clarity, because it is repetitive 
and could cause confusion. The first paragraph in Article II.D.4 
already states that it is regarding a required transfer of activities.
    6. In Article II.D.6, FEMA is making a minor grammatical change by 
deleting the word ``other'' and, in Article II.D.6.b, it is clarifying 
that the Company must provide the dates for the renewal or transfer of 
policies in its detailed transfer plan.
    7. In Article III.A.1.g, FEMA is clarifying that the Company is 
responsible for the payment of insurance brokers' commissions, as well 
as insurance agents', in alignment with Article IV.A and Article 
IV.B.2.
    8. For clarity, in Article III.A.3.a, FEMA is making a minor, non-
substantive change by substituting ``as much as possible'' with ``to 
the extent possible.''
    9. In new Article III.A.5.b, FEMA is adding a new provision in the 
Arrangement requiring a Vendor Oversight Plan to be included in the 
Operations Plan describing the Company's oversight of its Vendors, 
pursuant to 44 CFR 62.24(d).
    10. FEMA is redesignating the remaining subparagraphs in Article 
III.A.5 as III.A.5.c through III.A.5.j.
    11. In newly-redesignated Article III.A.5.f, FEMA is requiring WYO

[[Page 3892]]

Companies to include in their distribution plan the average rate of 
commissions they pay insurance agents and brokers ``for new business 
and renewals,'' and substituting ``producers'' with ``insurance agents 
and brokers.''
    12. In newly-redesignated Article III.A.5.g.iii, FEMA is adding 
``independent adjusters'' to the list of stakeholders the Company has 
to consider when providing key messaging during catastrophic events.
    13. For clarity and alignment with the definition in new Article 
I.D, in newly-redesignated Article III.A.5.i, FEMA is substituting 
``vendors or contractors'' with ``Service Providers.''
    14. In newly-redesignated Article III.A.5.j.i and in Article III.M, 
subparagraphs III.M.1, III.M.2.a.ii and III.M.2.b, FEMA is updating the 
reference to the system security requirements specified by the National 
Institute of Standards and Technology, ``Protecting Controlled 
Unclassified Information in Nonfederal Systems and Organizations,'' to 
the latest version, Revision 3 (May 2024). FEMA is also updating the 
redesignated citation in Article III.M.2.b.
    15. For clarity and alignment, in newly-redesignated Article 
III.A.5.j.ii, FEMA is adding ``pursuant to Article III.M'' at the end 
of the subparagraph.
    16. For clarity, in Article III.F.2.a, FEMA is making a minor, non-
substantive change by substituting ``Program'' with ``FEMA.''
    17. For clarity, in Article III.H.4, FEMA is making minor, non-
substantive changes by deleting ``notify agents of flood insurance'' 
and adding ``and.''
    18. In Article III.I.5, FEMA is adding ``[t]he Company must:'' and 
making minor, non-substantive grammatical changes.
    19. In Article III.N, FEMA is clarifying that the Company must 
ensure its Service Providers act consistently with the NFIA and written 
standards and procedures issued by FEMA, in addition to the Arrangement 
and FEMA's regulations and guidance.
    20. In Article IV.A, FEMA is making a minor, non-substantive change 
to clarify that the Company is liable for insurance broker commissions, 
as well as insurance agents', in alignment with Article III.A.1.g and 
Article IV.B.2.
    21. In Article IV.B.1, FEMA is changing the reference to the source 
used to obtain the data for the property/casualty industry, from A.M. 
Best to the National Association of Insurance Commissioners (NAIC). 
A.M. Best's data is derived from the NAIC. This will enable FEMA to use 
the latest available data gathered directly from the primary source. 
FEMA is also making a minor, non-substantive change by substituting 
```Other Act.,' `Gen. Exp.' And `Taxes''' and spelling it out as 
```Other Acquisition,' `General Expenses' and `Taxes.'''
    22. In Article IV.B.3, FEMA is making a non-substantive change by 
substituting the term ``Growth Bonus'' with ``Growth and Retention 
Bonus,'' without any material change to the provision, to acknowledge 
the current practice that bonuses are paid for both growth and 
retention potential.
    23. In Article IV.E.3.a, FEMA added ``and broker'' to clarify that 
it will not reimburse the Company for awards or judgements for damages 
and costs to defend litigation involving issues of broker negligence, 
errors or omissions, pursuant to 42 U.S.C. 4081(c).
    24. FEMA is adding two new subparagraphs to Article IV.E.3, 
subparagraphs IV.E.3.g and IV.E.3.h, to clarify that FEMA will not 
reimburse the Company for awards, judgments and costs to defend 
litigation when a default is entered against it, or the Company fails 
to remove a case filed in State court to Federal court in a timely 
manner.
    25. In Article V.A.3, FEMA is making a minor, non-substantive 
change by deleting ``Allocated and unallocated'' and leaving the more 
general term ``Loss Adjustment Expenses,'' to better align with the 
language in Article IV.C.
    26. In the last Article, FEMA is making a minor correction in 
numbering, from ``Article XV'' to ``Article XIV.'' The previous WYO 
Arrangement had a non-substantive error in numbering and FEMA is 
clarifying it.
    The Fiscal Year 2026 Arrangement reads as follows:

Financial Assistance/Subsidy Arrangement

Article I. General Provisions
    A. Parties. The parties to the Financial Assistance/Subsidy 
Arrangement are the Federal Emergency Management Agency (FEMA) and the 
Company. This Arrangement is solely between FEMA and the Company, and 
in no instance shall any of the Company's Service Providers have any 
rights under this Arrangement.
    B. Purpose. The purpose of this Financial Assistance/Subsidy 
Arrangement is to authorize the Company to sell and service flood 
insurance policies made available through the National Flood Insurance 
Program (NFIP) and adjust and pay claims arising under such policies as 
fiscal agents of the Federal Government.
    C. Authority. This Financial Assistance/Subsidy Arrangement is 
authorized under the National Flood Insurance Act of 1968 (NFIA) (42 
U.S.C. 4001 et seq.), and in particular, section 1345(a) of the NFIA 
(42 U.S.C. 4081(a)), as implemented by 44 CFR 62.23 and 62.24.
    D. Definitions.
    1. Service Provider means Vendors, Contractors, and independent 
adjusters working on behalf of the Company.
    2. Vendor means any entity hired by the Company to carry out 
administrative and operational responsibilities of the Company under 
the Arrangement, including, but not limited to, issuing and renewing 
policies, policy management, rating, collecting premiums and making 
refunds, claims handling, customer service, reporting and compliance 
requirements. In this context, Vendor does not include adjusters, 
insurance agents or brokers, or Company employees.
    3. Contractor means any other third-party Service Provider that 
does not meet the definition of Vendor. In this context, Contractor 
does not include adjusters, insurance agents or brokers, or Company 
employees.
Article II. Commencement and Termination
    A. The effective period of this Arrangement begins on October 1, 
2025, and terminates no earlier than September 30, 2026, subject to 
extension pursuant to Articles II.D and II.I. FEMA may provide 
financial assistance only for policy applications, renewals, and 
endorsements accepted by the Company during this period pursuant to the 
Program's effective date, underwriting, and eligibility rules.
    B. Pursuant to 44 CFR 62.23(a), FEMA will publish the Arrangement 
and the terms for subscription or re-subscription for Fiscal Year 2027 
in the Federal Register no later than April 1, 2026. Within ninety (90) 
calendar days of such publication, the Company must notify FEMA of its 
intent to re-subscribe to the WYO Program for the following term.
    C. Requesting Participation in WYO Program. Insurers interested in 
participating in the WYO Program, that have never participated or are 
returning to the Program after a period of non-participation, must 
submit a written request to participate.
    1. Participation is then contingent on submission of both:
    a. A completed application package, the requirements and contents 
of which FEMA will outline in its written response to the request to 
participate.
    b. A completed operations plan, whose requirements and contents are

[[Page 3893]]

outlined at Article III.A.5 of this Arrangement.
    2. Insurers that are already participating in the Program must 
submit their operations plan within ninety (90) calendar days as 
outlined in Article III.A.5 of this Arrangement.
    D. Uninterrupted Service to Policyholders and Transfer of Data and 
Records.
    1. To ensure uninterrupted service to policyholders, the Company 
must notify FEMA within thirty (30) calendar days from when the Company 
elects not to re-subscribe to the WYO Program during the term of this 
Arrangement, but no later than ninety (90) calendar days from the 
publication in the Federal Register of the Fiscal Year 2027 
Arrangement.
    2. The Company must notify FEMA as soon as possible, but no later 
than thirty (30) calendar days from when the Company elects to no 
longer sell or renew NFIP policies in a community as defined in 44 CFR 
59.1.
    3. If so notified under Article II.D.1 or II.D.2, or if FEMA 
chooses not to renew the Company's participation, FEMA, at its option, 
may require the continued performance of all or selected elements of 
this Arrangement for the period required for orderly transfer or 
cessation of business and settlement of accounts, not to exceed forty-
eight (48) months after the end of this Arrangement (September 30, 
2026), and may either require transfer of activities, in whole or in 
part, to FEMA under Article II.D.4 or allow transfer of activities, in 
whole or in part, to another WYO company under Article II.D.6.
    4. FEMA may require the Company to transfer all activities under 
this Arrangement to FEMA. Within thirty (30) calendar days of FEMA's 
election of this option, the Company must deliver to FEMA the 
following:
    a. A plan for the orderly transfer to FEMA of any continuing 
responsibilities in administering the policies issued by the Company 
under the Program including provisions for coordination assistance.
    b. All data received, produced, and maintained through the life of 
the Company's participation in the Program, including certain data, as 
determined by FEMA, in a standard format and medium.
    c. All claims and policy files, including those pertaining to 
receipts and disbursements that have occurred during the life of each 
policy. The Company must provide FEMA with a report showing, on a 
policy basis, any amounts due from or payable to policyholders, 
insurance agents, brokers, and others as of the transition date.
    d. All funds in its possession with respect to any policies 
transferred to FEMA for administration and the unearned expenses 
retained by the Company.
    e. A point of contact within the Company responsible for addressing 
issues that may arise from the Company's previous participation under 
the WYO Program.
    5. Within ninety (90) calendar days of FEMA receiving the Company's 
data and supporting documentation, FEMA will notify the Company of the 
date that FEMA will complete the transfer.
    6. FEMA may allow the Company to transfer all activities under this 
Arrangement to one or more WYO companies. Prior to commencing such 
transfer, the Company must submit, and FEMA must approve, a formal 
request. Such request must include the following:
    a. An assurance of uninterrupted service to policyholders.
    b. A detailed transfer plan providing for either: (1) the renewal 
of the Company's NFIP policies by one or more WYO companies and the 
date such transfer of NFIP policy renewals will be effective; or (2) 
the transfer of the Company's NFIP policies to one or more WYO 
companies and the date of the transfer of policies.
    c. A description of who the responsible party will be for 
liabilities relating to losses incurred by the Company in this or 
preceding Arrangement years.
    d. A point of contact within the Company responsible for addressing 
issues that may arise from the Company's previous participation under 
the WYO Program.
    7. FEMA will not reimburse the Company for costs associated with 
the transfer of activities under this Arrangement to FEMA or another 
WYO Company.
    8. Failure to timely transfer data. The Company agrees to hold FEMA 
harmless for all costs, liabilities, and expenses, including litigation 
expenses, incurred due to the Company's failure to timely transfer the 
data and information requested by FEMA or another WYO Company.
    E. Cancellation by FEMA.
    1. FEMA may cancel financial assistance and this Arrangement upon 
thirty (30) calendar days written notice to the Company stating one or 
more of the following reasons for such cancellation:
    a. Fraud or misrepresentation by the Company subsequent to the 
inception of the Arrangement.
    b. Nonpayment to FEMA of any amount due.
    c. Material failure to comply with the requirements of this 
Arrangement or with the written standards, procedures, or guidance 
issued by FEMA relating to the NFIP and applicable to the Company.
    d. Failure to maintain compliance with WYO company participation 
criteria at 44 CFR 62.24.
    e. Any other cause so serious or compelling a nature that affects 
the Company's present responsibility.
    2. If FEMA cancels this Arrangement pursuant to Article II.E.1, 
FEMA may require the transfer of administrative responsibilities, and 
the transfer of data and records as provided in Article II.D.4 and 
Article II.D.7-8. If transfer is required, the Company must remit to 
FEMA the unearned expenses retained by the Company. In such event, FEMA 
will assume all obligations and liabilities owed to policyholders under 
such policies, arising before and after the date of transfer.
    3. As an alternative to the transfer of the policies to FEMA 
pursuant to Article II.E.2, FEMA will consider a proposal, if it is 
made by the Company, for the assumption of responsibilities by another 
WYO company as provided in Article II.D.6 and Article II.D.7-8.
    F. The Company shall notify FEMA, immediately, if:
    1. An independent financial rating company downgrades its financial 
strength during its period of performance under this Arrangement; or
    2. It receives an order or directive making it unable to carry out 
its obligations under this Arrangement by the insurance industry 
regulatory body of any jurisdiction (e.g., Department of Insurance or 
Commissioner or Superintendent of Insurance) or court of law to which 
the Company is subject, including but not limited to being placed in 
receivership or run-off status by a State insurance regulatory body.
    G. In the event that the Company is unable or otherwise fails to 
carry out its obligations under this Arrangement for reasons set out in 
Article II.F.2:
    1. The Company agrees to transfer, and FEMA will accept, any and 
all WYO policies issued by the Company and in force as of the date of 
such inability or failure to perform. In such event FEMA will assume 
all obligations and liabilities within the scope of the Arrangement 
owed to policyholders arising before and after the date of transfer, 
and the Company will immediately transfer to FEMA all needed records 
and data, pursuant to Article II.D.4 and Article II.D.7-8, and all 
funds in its possession with respect

[[Page 3894]]

to all such policies transferred and the unearned expenses retained by 
the Company. As an alternative to the transfer of the policies to FEMA, 
FEMA will consider a proposal, if it is made by the Company, for the 
assumption of responsibilities under this Arrangement by another WYO 
company as provided by Article II.D.6 and Article II.D.7-8.
    2. If there is ongoing litigation, the Company must file a motion 
to stay the proceedings on any and all pending litigation within the 
scope of the Arrangement, and FEMA or, if approved by FEMA, another WYO 
company, will assume full litigation responsibility.
    H. In the event the NFIA is amended, repealed, expires, or if FEMA 
is otherwise without authority to continue the Program, FEMA may cancel 
financial assistance under this Arrangement for any new or renewal 
business, but the Arrangement will continue for policies in force that 
shall be allowed to run their term under the Arrangement.
    I. If FEMA does not publish the Fiscal Year 2027 Arrangement in the 
Federal Register on or before April 1, 2026, then FEMA may require the 
continued performance of all or selected elements of this Arrangement 
through December 31, 2027, but such extension may not exceed the 
expiration of the six (6) month period following publication of the 
Fiscal Year 2027 Arrangement in the Federal Register.
Article III. Undertakings of the Company
    A. Responsibilities of the Company.
    1. Policy Issuance and Maintenance. The Company must meet all 
requirements of the Financial Control Plan and any guidance issued by 
FEMA. The Company is responsible for the following:
    a. Compliance with Rating Procedures.
    b. Eligibility Determinations.
    c. Policy Issuances.
    d. Policy Endorsements.
    e. Policy Cancellations.
    f. Policy Correspondence.
    g. Payment of Insurance Agents' and Brokers' Commissions.
    h. Fund management, including the receipt, recording, disbursement, 
and timely deposit of NFIP funds.
    2. The Company must provide a live customer service agent that (1) 
is accessible to all policyholders via telephone during business days, 
and (2) can resolve commonplace customer service issues.
    3. Claims Processing.
    a. In general. The Company must process all claims consistent with 
the Standard Flood Insurance Policy, Financial Control Plan, Claims 
Manual, other guidance adopted by FEMA, and to the extent possible, 
with the Company's standard business practices for its non-NFIP 
policies.
    b. Adjuster registration. The Company may not use an independent 
adjuster to adjust a claim unless the independent adjuster:
    i. Holds a valid Flood Control Number issued by FEMA; or
    ii. Participates in the Flood Adjuster Capacity Program.
    c. Claim reinspections. The Company must cooperate with any claim 
reinspection by FEMA.
    4. Reports. The Company must certify its business under the WYO 
Program through monthly financial reports in accordance with the 
requirements of the Pivot Use Procedures. The Company must follow the 
Financial Control Plan and the WYO Accounting Procedures Manual. FEMA 
will validate and audit, in detail, these data and compare the results 
against Company reports.
    5. Operations Plan. Within ninety (90) calendar days of the 
commencement of this Arrangement, the Company must submit a written 
Operations Plan to FEMA describing its efforts to perform under this 
Arrangement. The plan must include the following:
    a. Private Flood Insurance Separation Plan. If applicable, a 
description of the Company's policies, procedures, and practices 
separating their NFIP flood insurance lines of business from their non-
NFIP flood insurance lines of business, including its implementation of 
Article III.F.
    b. Vendor Oversight Plan. If the Company uses a Vendor to carry out 
any of its responsibilities under this Arrangement, the Company shall 
submit to FEMA a Vendor Oversight Plan, and this Plan must:
    i. Identify the activities and responsibilities that will be 
carried out by the Vendor.
    ii. Include a description of the oversight measures the Company 
will perform of its Vendor to ensure compliance with the NFIA, this 
Arrangement, regulations, written standards, procedures, and guidance 
issued by FEMA.
    c. Marketing Plan. A marketing plan describing the Company's 
forecasted growth, efforts to achieve that growth, and ability to 
comply with any marketing guidelines provided by FEMA.
    d. Policy Retention Plan. A retention plan describing the Company's 
efforts to retain and renew policies and methods of communicating with 
policyholders on renewals.
    e. Customer Service Plan. A description of overall customer service 
practices, including ongoing and planned improvement efforts.
    f. Distribution Plan. A description of the Company's NFIP flood 
insurance distribution network, including anticipated number of 
insurance agents, efforts to train those insurance agents, and the 
average rate of commissions for new business and renewals paid to 
insurance agents and brokers by State.
    g. Catastrophic Claims Handling Plan. A catastrophic claims 
handling plan describing how the Company will respond and maintain 
service standards in catastrophic flood events, including:
    i. Deploying mobile or temporary claims centers to provide 
immediate policyholder assistance, including submission of notice of 
loss and claim status information.
    ii. Preparing people, processes, and tools for claims processing in 
remote work scenarios.
    iii. Preparing communications in advance for readiness throughout 
the year including a suite of printed and digital materials (e.g., 
advertisements, educational materials, social media messaging, website 
blogs and announcements) that provide key messaging to stakeholders, 
including policyholders, insurance agents, independent adjusters and 
the public following a catastrophic flood event.
    iv. Identifying the core areas of information technology that need 
to be scaled pre-event or are scalable post-event.
    v. Ensuring the availability of sufficient adjusters and examiners 
to handle sudden surge in claims filings and handling.
    h. Business Continuity Plan. A business continuity plan identifying 
threats and risks facing the Company's NFIP-related operations and how 
the Company will maintain operations in the event of a disaster 
affecting its operational capabilities.
    i. Privacy Protection Plan. A privacy protection plan that 
describes the Company's standards and required procedures for using and 
maintaining personally identifiable information, in its possession and 
control or in the possession or control of its Service Providers.
    j. System Security Plan. A system security plan that describes 
system boundaries, system environments of operation, how security 
requirements are implemented, and the relationships with or connections 
to other systems, including plans of action that describe how 
unimplemented security requirements will be met and how any planned 
mitigations will be

[[Page 3895]]

implemented, prepared in accordance with either:
    i. National Institute of Standards and Technology (NIST) Special 
Publication (SP) 800-171 ``Protecting Controlled Unclassified 
Information in Nonfederal Information Systems and Organizations,'' 
Revision 3, https://csrc.nist.gov/pubs/sp/800/171/r3/final; or
    ii. Another comparable standard deemed acceptable by FEMA, pursuant 
to Article III.M.
    B. Time Standards. WYO companies must meet the time standards 
provided below. Time will be measured from the date of receipt through 
the date the task is completed. In addition to the standards set forth 
below, all functions performed by the Company must be in accordance 
with the highest reasonably attainable quality standards generally used 
in the insurance and data processing field. Applicable time standards 
are:
    1. Application Processing--fifteen (15) business days (Note: if the 
policy cannot be sent due to insufficient or erroneous information or 
insufficient funds, the Company must send a request for correction or 
added moneys within ten (10) business days).
    2. Renewal processing--seven (7) business days.
    3. Endorsement processing--fifteen (15) business days.
    4. Cancellation processing--fifteen (15) business days.
    5. File examination--seven (7) business days from the day the 
Company receives the final report.
    6. Claims draft processing--seven (7) business days from completion 
of file examination.
    7. Claims adjustment--forty-five (45) calendar days average from 
the receipt of Notice of Loss (or equivalent) through completion of 
examination.
    8. Upload transactions to Pivot--one (1) business day.
    C. Policy Issuance.
    1. The flood insurance subject to this Arrangement must be only 
that insurance written by the Company in its own name pursuant to the 
NFIA.
    2. The Company must issue policies under the regulations prescribed 
by FEMA, in accordance with the NFIA, on a form approved by FEMA.
    3. The Company must issue all policies in consideration of such 
premiums and upon such terms and conditions and in such States or areas 
or subdivisions thereof as may be designated by FEMA and only where the 
Company is licensed by State law to engage in the property insurance 
business.
    D. Installment Plans for Premium Payments. During the term of the 
Arrangement, FEMA may require the Company to offer a monthly premium 
installment payment option.
    E. Lapse of Authority or Appropriation. FEMA may require the 
Company to discontinue issuing policies subject to this Arrangement 
immediately in the event Congressional authorization or appropriation 
for the NFIP lapses.
    F. Separation of Finances and Other Lines of Flood Insurance.
    1. The Company must separate Federal flood insurance funds from all 
other Company accounts, at a bank or banks of its choosing for the 
collection, retention and disbursement of Federal funds relating to its 
obligation under this Arrangement, less the Company's expenses as set 
forth in Article IV. The Company must remit all funds not required to 
meet current expenditures to the United States Treasury, in accordance 
with the provisions of the WYO Accounting Procedures Manual.
    2. Other Undertakings of the Company.
    a. Clear communication. If the Company also offers insurance 
policies covering the peril of flood outside of the NFIP in any 
geographic area in which FEMA authorizes the purchase of flood 
insurance, the Company must ensure that all public communications 
(whether written, recorded, electronic, or other) regarding non-NFIP 
insurance lines would not lead a reasonable person to believe that the 
NFIP, FEMA, or the Federal Government in any way endorses, sponsors, 
oversees, regulates, or otherwise has any connection with the non-NFIP 
insurance line. The Company may assure compliance with this requirement 
by prominently including in such communications the following 
statement: ``This insurance product is not affiliated with the National 
Flood Insurance Program.''
    b. Data protection. The Company may not use non-public data, 
information, or resources obtained in course of executing this 
Arrangement to further or support any activities outside the scope of 
this Arrangement.
    G. Claims. The Company must investigate, adjust, settle, and defend 
all claims or losses arising from policies issued under this 
Arrangement. Payment of flood insurance claims by the Company bind 
FEMA, subject to appeal.
    H. Compliance with Agency Standards and Guidelines.
    1. The Company must comply with the NFIA, regulations, written 
standards, procedures, and guidance issued by FEMA relating to the NFIP 
and applicable to the Company, including, but not limited to the 
following:
    a. WYO Program Financial Control Plan.
    b. Pivot Use Procedures.
    c. NFIP Flood Insurance Manual.
    d. NFIP Claims Manual.
    e. NFIP Litigation Manual.
    f. WYO Accounting Procedures Manual.
    g. WYO Company Bulletins.
    2. The Company must market flood insurance policies in a manner 
consistent with marketing guidelines established by FEMA.
    3. FEMA may require the Company to collect customer service 
information to monitor and improve its program delivery.
    4. The Company must notify its insurance agents of the requirement 
to comply with State regulations regarding flood insurance agent 
education and training opportunities, and assist FEMA in periodic 
assessment of insurance agent training needs.
    I. Compliance with Appeals Process.
    1. In general. FEMA will notify the Company when a policyholder 
files an appeal. After notification, the Company must provide FEMA the 
following information:
    a. All records created or maintained pursuant to this Arrangement 
requested by FEMA.
    b. A comprehensive claim file synopsis, redacted of personally 
identifiable information, that includes a summary of the appeal issues, 
the Company's position on each issue, and any additional relevant 
information. If, in the process of writing the synopsis, the Company 
determines that it can address the issue raised by the policyholder on 
appeal without further direction, it must notify FEMA. The Company will 
then work directly with the policyholder to achieve resolution and 
update FEMA upon completion. The Company may have a claims examiner 
review the file who is independent from the original decision and who 
possesses the authority to overturn the original decision if the facts 
support it.
    2. Cooperation. The Company must cooperate with FEMA throughout the 
appeal process until final resolution. This includes adhering to any 
written appeals guidance issued by FEMA.
    3. Resolution of Appeals. FEMA will close an appeal when:
    a. FEMA upholds the denial by the Company.
    b. FEMA overturns the denial by the Company and all necessary 
actions that follow are completed.
    c. The Company independently resolves the issue raised by the 
policyholder without further direction.

[[Page 3896]]

    d. The policyholder voluntarily withdraws the appeal.
    e. The policyholder files litigation.
    4. Processing of Additional Payments from Appeal. The Company must 
follow established NFIP adjusting practices and claim handling 
procedures for appeals that result in additional payment to a 
policyholder when FEMA does not explicitly direct such payment during 
the review of the appeal.
    5. Time Standards. The Company must:
    a. Provide FEMA with requested files pursuant to Article 
III.I.1.a--ten (10) business days after request.
    b. Provide FEMA with a comprehensive claim file synopsis pursuant 
to Article III.I.1.b--ten (10) business days after request.
    c. Respond to inquiries from FEMA regarding an appeal--ten (10) 
business days after inquiry.
    d. Inform FEMA of any litigation filed by a policyholder with a 
current appeal--ten (10) business days of notice.
    J. Subrogation.
    1. In general. Consistent with Federal law and guidance, the 
Company must use its customary business practices when pursuing 
subrogation.
    2. Referral to FEMA. Pursuant to 44 CFR 62.23(i)(8), in lieu of the 
Company pursuing a subrogation claim, WYO companies may refer such 
claims to FEMA.
    3. Notification. No more than ten (10) calendar days after either 
the Company identifies a possible subrogation claim or FEMA notifies 
the Company of a possible subrogation claim, the Company must notify 
FEMA of its intent to pursue the claim or refer the claim to FEMA.
    4. Cooperation. Pursuant to 44 CFR 62.23(i)(11), the Company must 
extend reasonable cooperation to FEMA's Office of the Chief Counsel on 
matters related to subrogation.
    K. Access to Records. The Company must furnish to FEMA such 
summaries and analysis of information including claim file information 
and property address, location, and/or site information in its records 
as may be necessary to carry out the purposes of the NFIA, in such form 
as FEMA, in cooperation with the Company, will prescribe.
    L. System for Award Management (SAM). The Company must be 
registered in the System for Award Management. Such registration must 
have an active status during the period of performance under this 
Arrangement. The Company must ensure that its SAM registration is 
accurate and up to date.
    M. Cybersecurity.
    1. In general. Unless the Company uses a compliance alternative 
pursuant to Article III.M.2, the Company must implement the security 
requirements specified by National Institute of Standards and 
Technology (NIST) Special Publication (SP) 800-171 ``Protecting 
Controlled Unclassified Information in Nonfederal Information Systems 
and Organizations'', Revision 3 (https://csrc.nist.gov/pubs/sp/800/171/r3/final) for any system that processes, stores, or transmits 
information that requires safeguarding or dissemination controls 
pursuant to and consistent with law, regulations, this Arrangement, or 
other applicable requirements, including information protected pursuant 
to Article XII.C and personally identifiable information of NFIP 
applicants and policyholders. Such implementation must be validated by 
a third-party assessment organization.
    2. Compliance alternatives. In lieu of compliance with Article 
III.M.1, the Company may either:
    a. Provide FEMA with documentation that the Company is securing the 
systems subject to the requirements of Article III.M.1 with either:
    i. ISO/IEC 27001, https://www.iso.org/isoiec-27001-information-security.html
    ii. NIST Cybersecurity Framework, https://csrc.nist.gov/pubs/sp/800/171/r3/final;
    iii. Cybersecurity Maturity Model Certification (CMMC 2.0), https://dodcio.defense.gov/CMMC/;
    iv. Service and Organization Controls (SOC) 2, https://www.aicpa.org/interestareas/frc/assuranceadvisoryservices/sorhome.html; 
or
    v. Another comparable standard deemed acceptable by FEMA.
    b. Provide a plan of action that describes how unimplemented 
security requirements of NIST SP 800-171, rev. 3, (https://csrc.nist.gov/pubs/sp/800/171/r3/final) will be met and how any planned 
mitigations will be implemented as part of the system security plan 
required under Article III.A.5.j.
    N. Company's Service Providers. The Company is required to ensure 
its Service Providers are acting consistently with the NFIA, this 
Arrangement, and regulations, written standards, procedures, and 
guidance issued by FEMA.
Article IV. Loss Costs, Expenses, Expense Reimbursement, and Premium 
Refunds
    A. The Company is liable for operating, administrative, and 
production expenses, including any State premium taxes, dividends, 
insurance agents' and brokers' commissions or any other expense of 
whatever nature incurred by the Company in the performance of its 
obligations under this Arrangement but excluding other taxes or fees, 
such as municipal or county premium taxes, surcharges on flood 
insurance premium, and guaranty fund assessments.
    B. Payment for Selling and Servicing Policies.
    1. Operating and Administrative Expenses. The Company may withhold, 
as operating and administrative expenses, other than insurance agents' 
or brokers' commissions, an amount from the Company's written premium 
on the policies covered by this Arrangement in reimbursement of all of 
the Company's marketing, operating, and administrative expenses, except 
for allocated and unallocated loss adjustment expenses described in 
Article IV.C. This amount will equal the sum of the average industry 
expenses ratios for ``Other Acquisition'', ``General Expenses'' and 
``Taxes'' calculated by aggregating premiums and expense amounts for 
each of five property coverages using direct premium and expense 
information to derive weighted average expense ratios. For this 
purpose, FEMA will use the latest available data for the property/
casualty industry for the prior Arrangement year, from the National 
Association of Insurance Commissioners (NAIC) annual statement in Part 
III of the Insurance Expense Exhibit for the following five property 
coverages: Fire, Allied Lines, Farmowners Multiple Peril, Homeowners 
Multiple Peril, and Commercial Multiple Peril (non-liability portion).
    2. Insurance Agent and Broker Compensation. The Company may retain 
fifteen (15) percent of the Company's written premium on the policies 
covered by this Arrangement as the commission allowance to meet the 
commissions or salaries of insurance agents, brokers, or other entities 
producing qualified flood insurance applications and other related 
expenses.
    3. Growth and Retention Bonus. FEMA may increase the amount of 
expense allowance retained by the Company depending on the extent to 
which the Company meets the marketing goals for the Arrangement year 
contained in marketing guidelines established pursuant to Article 
III.H.2. The total growth and retention bonuses paid to companies 
pursuant to this Arrangement may not exceed two (2) percent of the 
aggregate net written premium collected by all WYO companies. FEMA will 
pay the Company the amount of any increase after the end of the 
Arrangement year.

[[Page 3897]]

    C. FEMA will reimburse Loss Adjustment Expenses as follows:
    1. FEMA will reimburse unallocated loss adjustment expenses to the 
Company pursuant to a ``ULAE Schedule'' coordinated with the Company 
and provided by FEMA.
    2. FEMA will reimburse allocated loss adjustment expenses to the 
Company pursuant to a ``Fee Schedule'' coordinated with the Company and 
provided by FEMA. To ensure the availability of qualified insurance 
adjusters during catastrophic flood events, FEMA may, in its sole 
discretion, temporarily authorize the use of an alternative Fee 
Schedule with increased amounts during the term of this Arrangement for 
losses incurred during a time frame established by FEMA.
    3. FEMA will reimburse special allocated loss expenses under 44 CFR 
62.23(i)(9) and subrogation expenses reimbursable under 44 CFR 
62.23(i)(8) to the Company in accordance with guidelines issued by 
FEMA.
    D. Loss Payments.
    1. The Company must make loss payments for flood insurance policies 
from Federal funds retained in the bank account(s) established under 
Article III.F.1 and, if such funds are depleted, from Federal funds 
withdrawn from the National Flood Insurance Fund pursuant to Article V.
    2. Loss payments include payments because of awards, judgments for 
damages or settlements that arise under the scope of this Arrangement, 
and the Authorities set forth herein. All such loss payments and 
related expenses must meet the documentation requirements of the 
Financial Control Plan and of this Arrangement, and the Company must 
comply with the litigation documentation and notification requirements 
established by FEMA. Failure to meet these requirements may result in 
FEMA's decision not to provide reimbursement.
    E. Litigation Oversight and Reimbursable Litigation Expenses.
    1. Any litigation resulting from, related to, or arising from the 
Company's compliance with the written standards, procedures, and 
guidance issued by FEMA arises under the NFIA or regulations, and such 
legal issues raise a Federal question.
    2. The Company must conduct and oversee litigation arising out of 
the Company's participation in the NFIP in accordance with the National 
Flood Insurance Program Litigation Manual. When a specific issue is not 
addressed by the National Flood Insurance Program Litigation Manual, 
the Company must consult with FEMA's WYO Oversight Team.
    3. Limitation on Reimbursement and Payment of Litigation Expenses 
and Payment of Judgment and Award. FEMA will not reimburse the Company, 
in whole or part, for any award or judgment for damages, and any costs 
to defend litigation:
    a. Involving issues of insurance agent and broker negligence, 
errors or omissions;
    b. Grounded in actions by the Company that are significantly 
outside the scope of this Arrangement, including, but not limited to, 
reckless disregard of the Company's duties under the Arrangement, 
regulations or FEMA's written standards, procedures or guidance 
relating to the NFIP;
    c. Involving the submittal of inaccurate, false or fraudulent 
requests for litigation expense reimbursement;
    d. Where the Company failed to comply with the requirements of the 
NFIP Litigation Manual;
    e. Incurred after the Company became unable or otherwise failed to 
carry out its obligations under this Arrangement for the reasons 
contained in Article II.F.2, except that FEMA will reimburse the 
Company for reasonable costs of filing motions to stay proceedings;
    f. When FEMA and the Company's interests diverge, including 
positions on litigation strategy and settlement;
    g. When a Company fails to respond to a lawsuit and a default is 
entered; or
    h. When a Company fails to remove a case filed in State court to 
Federal court in a timely manner.
    F. Refunds. The Company must make premium refunds required by FEMA 
to applicants and policyholders from Federal flood insurance funds 
referred to in Article III.F.1, and, if such funds are depleted, from 
funds derived by withdrawing from the National Flood Insurance Fund 
pursuant to Article V. The Company may not refund any premium from 
Federal flood insurance funds to applicants or policyholders in any 
manner other than as specified by FEMA since flood insurance premiums 
are funds of the Federal Government.
    G. Suspension and Debarment.
    1. In general. The Company may not contract with or employ any 
person who is suspended or debarred from participating in Federal 
transactions pursuant to 2 CFR part 180 (covering Federal 
nonprocurement transactions) or 48 CFR part 9, subpart 9.4 (covering 
Federal procurement transactions) in relation to this Arrangement.
    2. Reimbursement. FEMA will not reimburse the company for any 
expenses incurred in violation of Article IV.G.1.
    3. Compliance. The Company may ensure compliance with Article 
IV.G.1 by:
    a. Checking the System for Awards Management at sam.gov;
    b. Collecting a certification from that person; or
    c. Adding a clause or condition to the transaction with that 
person.
Article V. Undertakings of the Government
    A. FEMA must enable the Company to withdraw funds from the National 
Flood Insurance Fund daily, if needed, pursuant to prescribed 
procedures implemented by FEMA. FEMA will increase the amounts of the 
authorizations as necessary to meet the obligations of the Company 
under Article IV.C-F. The Company may only request funds when net 
premium income has been depleted. The timing and amount of cash 
advances must be as close as is administratively feasible to the actual 
disbursements by the recipient organization for allowable expenses. 
Request for payment may not ordinarily be drawn more frequently than 
daily. The Company may withdraw funds from the National Flood Insurance 
Fund for any of the following reasons:
    1. Payment of claims, as described in Article IV.D.
    2. Refunds to applicants and policyholders for insurance premium 
overpayment, or if the application for insurance is rejected or when 
cancellation or endorsement of a policy results in a premium refund, as 
described in Article IV.F.
    3. Loss Adjustment Expenses, as described in Article IV.C.
    B. FEMA must provide technical assistance to the Company as 
follows:
    1. NFIP policy and history.
    2. Clarification of underwriting, coverage, and claims handling.
    3. Other assistance as needed.
    C. FEMA must provide the Company with a copy of all formal written 
appeal decisions conducted in accordance with Section 205 of the 
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004, Public 
Law 108-264 and 44 CFR 62.20.
    D. Prior to the end of the Arrangement period, FEMA may provide the 
Company a statistical summary of their performance during the signed 
Arrangement period. This summary will detail the Company's performance 
individually, as well as compare the Company's performance to the 
aggregate performance of all WYO companies and the NFIP Direct 
Servicing Agent.

[[Page 3898]]

Article VI. Cash Management and Accounting
    A. FEMA must make available to the Company during the entire term 
of this Arrangement the ability to withdraw funds from the National 
Flood Insurance Fund provided for in Article V. The Company may 
withdraw funds from the National Flood Insurance Fund for reimbursement 
of its expenses as set forth in Article V.A that exceed net written 
premiums collected by the Company from the effective date of this 
Arrangement or continuation period to the date of the draw. In the 
event that adequate funding is not available to meet current Company 
obligations for flood policy claim payments issued, FEMA must direct 
the Company to immediately suspend the issuance of loss payments until 
such time as adequate funds are available. The Company is not required 
to pay claims from their own funds in the event of such suspension.
    B. The Company must remit all funds, including interest, not 
required to meet current expenditures to the United States Treasury, in 
accordance with the provisions of the WYO Accounting Procedures Manual 
or procedures approved in writing by FEMA.
    C. In the event the Company elects not to participate in the 
Program in this or any subsequent fiscal year, or is otherwise unable 
or not permitted to participate, the Company and FEMA must make a 
provisional settlement of all amounts due or owing within three (3) 
months of the expiration or termination of this Arrangement. This 
settlement must include net premiums collected, funds withdrawn from 
the National Flood Insurance Fund, and reserves for outstanding claims. 
The Company and FEMA agree to make a final settlement of accounts for 
all obligations arising from this Arrangement within forty-eight (48) 
months, which may be extended for good cause and subject to audit, of 
its expiration or termination, except for contingent liabilities that 
must be listed by the Company. At the time of final settlement, the 
balance, if any, due FEMA or the Company must be remitted by the other 
immediately and the operating year under this Arrangement must be 
closed.
    D. Upon FEMA's request, the Company must provide FEMA with a true 
and correct copy of the Company's Fire and Casualty Annual Statement, 
and Insurance Expense Exhibit or amendments thereof as filed with the 
State Insurance Authority of the Company's domiciliary State.
    E. The Company must comply with the requirements of the False 
Claims Act (41 U.S.C. 3729-3733), which prohibits submission of false 
or fraudulent claims for payment to the Federal Government.
Article VII. Arbitration
    If any misunderstanding or dispute arises between the Company and 
FEMA with reference to any factual issue under any provisions of this 
Arrangement or with respect to FEMA's nonrenewal of the Company's 
participation, other than as to legal liability under or interpretation 
of the Standard Flood Insurance Policy, such misunderstanding or 
dispute may be submitted to arbitration for a determination that will 
be binding upon approval by FEMA. The Company and FEMA may agree on and 
appoint an arbitrator who will investigate the subject of the 
misunderstanding or dispute and make a determination. If the Company 
and FEMA cannot agree on the appointment of an arbitrator, then two 
arbitrators will be appointed, one to be chosen by the Company and one 
by FEMA.
    The two arbitrators so chosen, if they are unable to reach an 
agreement, must select a third arbitrator who must act as umpire, and 
such umpire's determination will become final only upon approval by 
FEMA. The Company and FEMA shall bear in equal shares all expenses of 
the arbitration. Findings, proposed awards, and determinations 
resulting from arbitration proceedings carried out under this section, 
upon objection by FEMA or the Company, shall be inadmissible as 
evidence in any subsequent proceedings in any court of competent 
jurisdiction.
    This Article shall indefinitely succeed the term of this 
Arrangement.
Article VIII. Errors and Omissions
    A. In the event of negligence by the Company that has not resulted 
in litigation but has resulted in a claim against the Company, FEMA 
will not consider reimbursement of the Company for costs incurred due 
to that negligence unless the Company takes all reasonable actions to 
rectify the negligence and to mitigate any such costs as soon as 
possible after discovery of the negligence. The Company may choose not 
to seek reimbursement from FEMA.
    B. If the Company has made a claim payment to an insured without 
including a mortgagee (or trustee) of which the Company had actual 
notice prior to making payment, and subsequently determines that the 
mortgagee (or trustee) is also entitled to any part of said claim 
payment, any additional payment may not be paid by the Company from any 
portion of the premium and any funds derived from any Federal funds 
deposited in the bank account described in Article III.F.1. In 
addition, the Company agrees to hold the Federal Government harmless 
against any claim asserted against the Federal Government by any such 
mortgagee (or trustee), as described in the preceding sentence, by 
reason of any claim payment made to any insured under the circumstances 
described above.
Article IX. Officials Not to Benefit
    No Member or Delegate to Congress, or Resident Commissioner, may be 
admitted to any share or part of this Arrangement, or to any benefit 
that may arise therefrom; but this provision may not be construed to 
extend to this Arrangement if made with a corporation for its general 
benefit.
Article X. Offset
    At the settlement of accounts, the Company and FEMA have, and may 
exercise, the right to offset any balance or balances, whether on 
account of premiums, commissions, losses, loss adjustment expenses, 
salvage, or otherwise due one party to the other, its successors or 
assigns, hereunder or under any other Arrangements heretofore or 
hereafter entered into between the Company and FEMA. This right of 
offset shall not be affected or diminished because of insolvency of the 
Company.
    All debts or credits of the same class, whether liquidated or 
unliquidated, in favor of or against either party to this Arrangement 
on the date of entry, or any order of conservation, receivership, or 
liquidation, shall be deemed to be mutual debts and credits and shall 
be offset with the balance only to be allowed or paid. No offset shall 
be allowed where a conservator, receiver, or liquidator has been 
appointed and where an obligation was purchased by or transferred to a 
party hereunder to be used as an offset.
    Although a claim on the part of either party against the other may 
be unliquidated or undetermined in amount on the date of the entry of 
the order, such claim will be regarded as being in existence as of the 
date of such order and any credits or claims of the same class then in 
existence and held by the other party may be offset against it.
Article XI. Equal Opportunity
    A. Age Discrimination Act of 1975. The Company must comply with the 
requirements of the Age Discrimination Act of 1975, Public Law 94-135 
(42

[[Page 3899]]

U.S.C. 6101 et seq.) which prohibits discrimination on the basis of age 
in any program or activity receiving Federal financial assistance.
    B. Americans with Disabilities Act. The Company must comply with 
the requirements of Titles I, II, and III of the Americans with 
Disabilities Act, Public Law 101-336 (42 U.S.C. 12101-12213), which 
prohibits recipients from discriminating on the basis of disability in 
the operation of public entities, public and rivate transportation 
systems, places of public accommodation, and certain testing entities.
    C. Civil Rights Act of 1964-Title VI. The Company must comply with 
the requirements of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 
2000d et seq.), which provides that no person in the United States 
will, on the grounds of race, color, or national origin, be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal 
financial assistance. Department of Homeland Security implementing 
regulations for the Act are found at 6 CFR part 21 and 44 CFR part 7.
    D. Civil Rights Act of 1968. The Company must comply with Title 
VIII of the Civil Rights Act of 1968, which prohibits recipients from 
discriminating in the sale, rental, financing, and advertising of 
dwellings, or in the provision of services in connection therewith, on 
the basis of race, color, national origin, religion, disability, 
familial status, and sex as implemented by the U.S. Department of 
Housing and Urban Development at 24 CFR part 100.
    E. Rehabilitation Act of 1973. The Company must comply with the 
requirements of Section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), which provides that no otherwise qualified handicapped 
individuals in the United States will, solely by reason of the 
handicap, be excluded from participation in, be denied the benefits of, 
or be subjected to discrimination under any program or activity 
receiving Federal financial assistance.
Article XII. Access to Books and Records
    A. FEMA, the Department of Homeland Security, and the Comptroller 
General of the United States, or their duly authorized representatives, 
for the purpose of investigation, audit, examination, and to enable 
FEMA to carry out the NFIP shall have access to any books, documents, 
papers and records of the Company that are pertinent to this 
Arrangement. The Company shall keep records that fully disclose all 
matters pertinent to this Arrangement, including premiums and claims 
paid or payable under policies issued pursuant to this Arrangement. 
Records of accounts and records relating to financial assistance shall 
be retained and available for three (3) years after final settlement of 
accounts, and to financial assistance, three (3) years after final 
adjustment of such claims. FEMA shall have access to policyholder and 
claim records at all times for purposes of the review, defense, 
examination, adjustment, or investigation of any claim under a flood 
insurance policy subject to this Arrangement.
    B. Nondisclosure by FEMA. FEMA, to the extent permitted by law and 
regulation, will safeguard and treat information submitted or made 
available by the Company pursuant to this Arrangement as confidential 
where the information has been marked ``confidential'' by the Company 
and the Company customarily keeps such information private or closely 
held. To the extent permitted by law and regulation, FEMA will not 
release such information to the public pursuant to a Freedom of 
Information Act (FOIA) request, 5 U.S.C. 552, without prior 
notification to the Company. FEMA may transfer documents provided by 
the Company to any department or agency within the Executive Branch or 
to either house of Congress if the information relates to matters 
within the organization's jurisdiction. FEMA may also release the 
information submitted pursuant to a judicial order from a court of 
competent jurisdiction.
    C. Nondisclosure by Company.
    1. In general. The Company, to the extent permitted by law, must 
safeguard and treat information submitted or made available by FEMA 
pursuant to this Arrangement as confidential where the information has 
been marked or identified as ``confidential'' by FEMA and FEMA 
customarily keeps such information private or closely held. The Company 
may not disclose such confidential information to a third-party without 
the express written consent of FEMA or as otherwise required by law.
    2. Other protections. Article XII.C.1 shall not be construed as to 
limit the effect of any other requirement on the Company to protect 
information from disclosure, including a joint defense agreement or 
under the Privacy Act.
Article XIII. Compliance With the NFIA and Regulations
    This Arrangement and all policies of insurance issued pursuant 
thereto are subject to Federal law and regulations.
Article XIV. Relationship Between the Parties and the Insured
    Inasmuch as the Federal Government is a guarantor hereunder, the 
primary relationship between the Company and the Federal Government is 
one of a fiduciary nature, that is, to ensure that any taxpayer funds 
are accounted for and appropriately expended. The Company is a fiscal 
agent of the Federal Government, but is not a general agent of the 
Federal Government. The Company is solely responsible for its 
obligations to its insured under any policy issued pursuant hereto, 
such that the Federal Government is not a proper party to any lawsuit 
arising out of such policies.
    Authority: 42 U.S.C. 4071, 4081; 44 CFR 62.23.

Jeffrey Jackson,
Assistant Administrator (A) for Federal Insurance Directorate, 
Resilience Federal Emergency Management Agency.
[FR Doc. 2025-00511 Filed 1-14-25; 8:45 am]
BILLING CODE 9111-52-P
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