SECTION 1: The General Laws are hereby amended by inserting after chapter 175M the following chapter:-

CHAPTER 175N:

PRIVATE FLOOD INSURANCE

Section 1. The following words as used in this chapter shall, unless the context otherwise requires, have the following meanings:

“Authorized Insurer”, an insurer authorized by the division of insurance to write insurance under a certificate of authority issued by the division to transact insurance in the commonwealth.

“Commissioner”, the commissioner of the division of insurance.

“National Flood Insurance Program”, the program of flood insurance coverage and floodplain management administered under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et. seq) and applicable federal regulations promulgated in Title 44 of the Code of Federal Regulations.

“Primary residential flood insurance”, an insurance policy covering losses from flood to residential property, other than commercial property, written in the commonwealth by any insurer authorized to do business that is not written to apply coverage in excess of the coverage provided under another flood insurance policy, whether issued by a private insurer or the National Flood Insurance Program.

Section 2. (a) Rates for flood insurance coverage established pursuant to this paragraph are not subject to prior approval by the division of insurance.  An insurer must attest that the rates are based on actuarial data, methodologies, standards, and guidelines relating to flood that are not excessive, inadequate, or unfairly discriminatory. The division of insurance may audit an insurer’s flood rates to ensure compliance with State laws and regulations.

(b) An insurer shall file with the division of insurance all rates and any change to such rates within 30 days after the effective date. The notice of a rate change must include the name of the insurer and the average statewide percentage change in rates. Actuarial data with regard to such rates for flood coverage must be maintained by the insurer for 2 years after the effective date of such rate change.

Section 3. The division of insurance may require, through the application of the commonwealth’s existing regulatory system:

(a) that an insurer file the forms for primary residential flood insurance coverage;

(b) that an authorized insurer may issue an insurance policy, contract, or endorsement; and,

(c) for residential properties required to have flood insurance that are in a Special Flood Hazard Area designated by the Federal Emergency Management Agency, that the coverage at least meets the private flood insurance requirements as specified in 42 U.S.C. § 4012a(b) and applicable federal regulations in document 84 FR 4953, effective July 1, 2019.

Section 4. Authorized insurers must (a) notify the division of insurance of plans to sell primary residential flood insurance products in accordance with the State’s rate filing laws but at least 30 days before writing such flood insurance in this State; and (b) file a plan of operation and financial projections or material revisions to such plan.

Section 5. (a) If a consumer currently has no coverage under the national flood insurance program, before placing the consumer applicant with private flood insurance, the consumer must be informed of the existence of the national flood insurance program.

(b) All consumers covered under subsection 5(a), including but not limited to consumers who currently have coverage under the national flood insurance program must be informed that the coverage under the national flood insurance program may be provided at a subsidized rate and that the full-risk rate for flood insurance may apply to the property if the applicant later seeks to reinstate coverage under the program.  The insurance producer, surplus lines broker, or the insurer upon its election or if there is no producer or broker must provide such notice. 

(c) Only applicants who live in a special flood hazard area are subject to this section.  This section automatically sunsets if federal legislation is enacted allowing the insured to switch between private flood insurance and national flood insurance program coverage without risk of penalty.

Section 6. (a) Notice of cancellation or nonrenewal, other than for nonpayment of premium, as allowed by the division, shall be made at least 45 days before the cancellation or nonrenewal of private flood insurance coverage to the insured.

(b) Notwithstanding subsection 6(a), notice of cancellation for nonpayment of premium, or fraud or misrepresentation in the application, shall be made and provided as required by the commissioner.

Section 7. Section 168 of Chapter 175 of the General Laws shall not apply to flood coverage under an insurance policy issued by an eligible surplus lines insurer unless and until the commissioner certifies in a bulletin or order that the admitted private flood insurance market is adequate.

Section 8. (a) Writing private flood insurance does not constitute participation in the property insurance market for purposes of determining participation in the Massachusetts Property Insurance Underwriting Association under Chapter 175C of the General Laws.

(b) All rates, supplementary rate information, and any supporting information filed under this act shall be open to public inspection upon disposition, except information marked and accepted by the commissioner as confidential, trade secret, or proprietary by the insurer or filer in accordance with section 4A of chapter 175.  Copies may be obtained from the commissioner upon request and upon payment of a reasonable fee.

(c) With respect to the regulation of flood coverage written in this state by authorized insurers, this section supersedes any other provision in the state insurance code in the event of a conflict.

(d) An insurer may certify that the insurance policy meets the definition of “private flood insurance,” as specified in 42 U.S.C. § 4012a(b)(7) and applicable federal regulations.

(e) It is the intent of the legislature that nothing in this law restrict the use of existing filings by an insurer or limit ability of private insurers to provide flood insurance coverage of any type not addressed herein.

Section 10. (a) (1) The division of banks shall by regulation require regulated lending institutions, as a condition of making, increasing, extending, or renewing any loan secured by improved real estate or a mobile home that the regulated lending institution determines is located or is to be located in an area that has been identified by the commissioner under 42 U.S.C. Chapter 50 as an area having special flood hazards, to notify the purchaser or lessee, or to obtain satisfactory assurances that the seller or lessor has notified the purchaser or lessee, and the servicer of the loan of such special flood hazards, in writing, a reasonable period in advance of the signing of the purchase agreement, lease, or other documents involved in the transaction. The regulations also shall require that the regulated lending institution retain a record of the receipt of the notices by the purchaser or lessee and the servicer.

(2) Written notification required under subsection (a) of this section shall include:

(i) a warning, in a form to be established by the division of banks, stating that the building on the improved real estate securing the loan is located, or the mobile home securing the loan is or is to be located, in an area having special flood hazards;

(ii) a description of the flood insurance purchase requirements under section 102(b) of the Flood Disaster Protection Chapter, 42 U.S.C. Chapter 50;

(iii) a statement that flood insurance coverage may be purchased under the National Flood Insurance Program and also is available from private insurers; and

(iv) any other information that the division of banks considers necessary to carry out the purposes of the national flood insurance program.

(b) The division of banks shall by regulation require regulated lending institutions, in connection with the making, increasing, extending, renewing, selling, or transferring any loan described in subsection (a)(1) of section 10, to notify, in writing, the division of banks of the servicer of the loan during the term of the loan. Such institutions shall also notify the division of banks of any change in the servicer of the loan, not later than 60 days after the effective date of such change. The regulations under this subsection shall provide that, upon any change in the servicing of a loan, the duty to provide notification under this subsection shall transfer to the transferee servicer of the loan.

(c) The division of banks shall, not less than 45 days before the expiration of any contract for flood insurance under this chapter, issue notice of such expiration by first-class mail to the owner of the property covered by the contract, the servicer of any loan secured by the property covered by the contract, and, if known by the division of banks, the owner of the loan.

Section 11. (a) The division of insurance may adopt rules and regulations to implement this law.

(b) The division of banks may adopt rules and regulations to implement this law.

(c) The division of banks shall submit a report to the legislature on the implementation of this chapter and on compliance with the rules one year after passage.