Government Pays Private Companies to Sell Government Insurance
Published Date: 1/15/2025
Notice
Summary
FEMA is inviting private insurance companies to join the National Flood Insurance Program’s Write Your Own (WYO) Program for Fiscal Year 2026. Insurers who want to participate must let FEMA know by May 15, 2025. This program helps companies sell and manage flood insurance policies, keeping flood protection strong and available for communities.
Analyzed Economic Effects
10 provisions identified: 7 benefits, 2 costs, 1 mixed.
Insurers: Sign up by May 15, 2025
FEMA is inviting private insurance companies to apply to participate in the NFIP Write Your Own (WYO) Program for Fiscal Year 2026. Interested insurers must submit their intent to subscribe or re-subscribe by May 15, 2025.
Companies Keep 15% Commission Allowance
Under the FY2026 Arrangement, a WYO Company may retain fifteen percent (15%) of the Company's written premium on NFIP policies as the commission allowance to meet commissions or salaries of insurance agents, brokers, or other producers.
Claims and Service Time Standards Set
The Arrangement sets time standards companies must meet, including application processing in fifteen (15) business days, renewal processing in seven (7) business days, endorsement and cancellation processing in fifteen (15) business days, and average claims adjustment in forty-five (45) calendar days from receipt of Notice of Loss.
Monthly Payment Option May Be Required
During the term of the FY2026 Arrangement, FEMA may require WYO Companies to offer a monthly premium installment payment option to policyholders.
Reimbursement for Loss Adjustment Expenses
FEMA will reimburse unallocated loss adjustment expenses according to a ULAE Schedule and allocated loss adjustment expenses according to a Fee Schedule coordinated with the Company; FEMA may temporarily authorize increased Fee Schedule amounts during a defined catastrophic event timeframe.
Companies Liable for Operating Expenses
The Company is liable for operating, administrative, and production expenses (including State premium taxes and agents' and brokers' commissions) incurred under this Arrangement, though FEMA will reimburse certain loss adjustment expenses under separate provisions.
FEMA May Cancel with 30-Day Notice
FEMA may cancel financial assistance and the Arrangement with thirty (30) calendar days' written notice for reasons including fraud, nonpayment to FEMA, material failure to comply, or failure to meet 44 CFR 62.24 participation criteria; FEMA may require transfer of administrative responsibilities and records if it cancels.
Arrangement Effective Oct 1, 2025–Sep 30, 2026
The FY2026 Arrangement is effective October 1, 2025 through at least September 30, 2026; FEMA will provide financial assistance only for policy applications, renewals, and endorsements accepted by the Company during that period. FEMA will publish the FY2027 Arrangement no later than April 1, 2026, and companies must notify FEMA of intent to re-subscribe within 90 calendar days of that publication.
Growth Bonus Cap of 2% of Premiums
FEMA may increase a Company's expense allowance as a Growth and Retention Bonus for meeting marketing goals, but total growth and retention bonuses paid to companies may not exceed two percent (2%) of the aggregate net written premium collected by all WYO companies for the Arrangement year.
Cybersecurity Standards Required for Systems
Companies must implement NIST SP 800-171 Revision 3 (Protecting Controlled Unclassified Information), Revision 3 (May 2024), for systems that process NFIP-protected information, validated by a third-party assessment organization; companies may use specified alternative standards (e.g., ISO/IEC 27001, NIST CSF, CMMC 2.0, SOC 2) or provide a plan of action for unimplemented NIST requirements.
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