For RCBAPs, do you require the bank be listed as a certificate holder on the policy? We have been doing this; however, recently some insurers have been unwilling to add us. Has anyone else run into this situation? How are you handling?

You mean listed as mortgagee? - not allowed on a RCBAP. If there were 200 condo units, you could end up with 200 mortgagees listed.

No, we are not requesting being added as a mortgagee. We are requesting that we are added as a certificate holder where we would be notified if the policy was cancelled and are being provided proof that insurance is in effect.

The term "certificate holder" is not used in the entire Flood Insurance Manual - so I guess I am not sure what you are referring too. It is not a NFIP term.

Thanks rlcarey. We were unable to identify it anywhere either and were considering removing it from our procedure based upon the recent challenges when making this request. Previous discussions with other local institutions indicated it was their practice to make the same request. However, we wanted to see if other institutions were requiring this and if so, were they experiencing any challenges.

I'm going to follow up with my question here as I understand what C0mp!y is asking. I also searched in the Flood forum and found several other threads on the same topic, but this thread appears to be the most recent.

We currently have over 100 active loans and have made countless more loans over the years that are secured by residential condo units at South Padre Island. Most, if not all, of these loans are in a flood zone so we've required flood insurance. Most, if not all, all of these are part of a condominium association so a RCBAP is provided to evidence coverage.

For as long as I've worked here at this Bank, we have always received from the local insurance agencies in the area some documentation of the RCBAP that contains the Bank's name, our borrower's name and the unit # associated with our loan. This might be provided on some Accord-Evidence of Insurance document, a Certificate of Insurance document or some insurance agency in-house prepared document all of which might show a schedule of all policies for the condo association, the replacement cost value, the number of units per building, the Bank's name (as Certificate Holder, or in Additional Interest and sometime as "Mortgagee" even though technically we are not the Mortagee on the Master Policy), our borrower's name and the unit #. We are still receiving this documentation today on pretty much all our loans with the exception of 1 insurance agency in our area that is pushing back hard on this..

While I understand that the Bank is not technically the "Mortagee" on the master policy for the association, most banks in the area for years have provided some documentation and today still provide this documentation that shows the flood policy in place, the amount of coverage, the RCV for the building, the number of units, our borrower's name, the unit number and our name in any type of document I've described earlier.

We now have 1 insurance agency that is telling us they will not provide any documentation (Certificate of Insurance/Accord Evidence of Insurance) that provides this "additional information" that includes the Bank's name, our borrower's name, and the unit # either in the Additional Interest section or Other Remarks section.

I found it odd that this one insurance agency is pushing back hard on this while pretty much all others don't on their RCBAP documentation.... but when searching here in BOL, it appears that others have stated they are experiencing the same thing with some insurance agencies in their area.

Did something change with the insurance industry that some insurance agencies are now pushing back on this with respect to condo association policies?

It basically comes down to one single thing.

Regardless of what insurance agents may say or do, unless it is on a declaration page that includes the specifics as required from the NFIP or from the NFIP itself, whatever document that agents are giving you are worthless.

If there is a loss, the flood insurance policy pays out to the condo association which then will be responsible for repairing the condo building using the insurance proceeds, along with any additional assessments to the owners. The Bank will never have a claim on the insurance proceeds, as they do not belong to the condo holder and the condo association is not a party to your loan.

Thanks for the response Randy. I get how the condo association policy would work in the event of a loss payout. I know the Bank is not listed as the mortgagee on the Master policy and would not receive any insurance proceeds (knocking on wood... fortunately, we have never had to deal with any loss situation involving a condo).

Still, I don't agree that the documentation they provide is worthless...particularly if the Bank is requesting it. Not all items requested by a lender have to be dictated by some regulatory requirement. They might be requested as a matter of bank policy to help substantiate or support compliance with something.

As I stated earlier, the insurance agencies in our area have always provided "documentation" that reflects the information I've stated above and pretty much all of them still do accept this one agency. Examiners have also always checked for this documentation... at least the OCC always had... when they would exam us for flood and reviewed our condo loans. We have always had the documentation in file to show them that shows the Bank's name, the specific unit # securing our loan and borrower's name so it's never created an issue for us. While it may not be technically required, it has always been requested and provided as a best practice in part because examiners have looked for this info (it's also a safe assumption that examiners probably look for this info because they typically see it provided when they look at condo secured loans during their exams).

Again, we are still getting this "additional information" from all insurance agencies in the area for condo association policies...EXCEPT from this one insurance agency. When I "searched" for this topic in here, I see that others were getting the same kind of documentation I've described above that we've been getting and they too now are experiencing a similar pushback from some insurance agencies on providing this additional information.

I'm just curious as to why? What happened? Did something come out in the insurance industry where they were told, hey guys for condo association policies, don't provide lenders with the additional information they might be requesting! I've seen some responses where they communicate that the lender should not be added as the mortgagee for the master policy. I don't disagree with that and we certainly are not asking the one insurance company that is pushing back to do that. We just simply asked them to provide the Bank's name, our borrower's name and the unit # either in the Additional Interest section or Other remarks section or on their own agency letterhead with a schedule of policies as a matter of information only like they did with the previous years policy and like every other agency in the area is currently doing.

Boy, am I confused. You have, I assume, a title search or title policy to prove that the person that signs the security agreement for the condo actually owns it and you have a declaration page for the RCBAP that gives the condo association's name, the address of the condo, the number of units, the replacement costs and the amount of the flood insurance coverage.

I am at a total loss as to what bearing documentation that shows the Bank's name, the specific unit # securing our loan and borrower's name has on flood insurance. It is meaningless information, as you already know that I hope. If your examiners are expecting it, it just means that they have no clue what they are doing.

Whether an insurance agent provides this absolutely meaningless information to you or not has absolutely no impact on whether or not the condo is covered by adequate insurance. In fact, why would an insurance agent that handles the RCBAP policy even know or care to know the current condo owners and which banks may or may have not lent money to them. The insurance agent is under an obligation to give the condo association a copy of the declaration page, the condo association is under an obligation to make this proof of insurance available to the condo owners, and the owners are responsible to ensuring any lender they are dealing with receives a copy.

If you have insurance agents that are cooperative enough to provide you copies of the declaration page, I would be counting myself lucky without trying to burden them with additional responsibilities. I have reviewed a lot of condo loans in my life in Southern Texas.

Why the confusion?

I think I made the case pretty strongly that providing this "additional information" seems to have been standard practice by insurance agencies on condo association policies for years with all but one in our area still doing this. Can't be much of a burden if they've been providing this information all this time and are still doing it. I've never received any complaints from an insurance agency on providing this information.

As far as the OCC examiners not having a clue on compliance.... well, you won't get much of an argument from me there, but that doesn't change the fact that they've always looked for this and have always seen it provided.... just as I have always seen the information provided for all condo loans involving an RCBAP except this one particular loan transaction involving this one insurance agency.

Again when searching for this topic here in BOL, you'll see that others have also been provided with the very same "additional information" all this time and just now are seeing "some" push back on having the information provided.

I'll get back to my question as to why? What changed? Whether you agree with it or not... whether you think the information is "worthless" or not, the fact of the matter is that this has always been provided, it is still currently being provided (at least in our area) and now we have one agency balking at providing the info and based on some others in here, other agencies out there are also starting to balk at providing this info. It's not unreasonable for me to ask why now? What changed?

As a commercial lines insurance agent working in a coastal area, I have an idea of why an agency that cooperated in the past is now pushing back on evidence of flood coverage.

When NFIP RCBAP policies were the only way to go, it was easy enough to send off a declarations page and be done with it. All the relevant information (replacement cost, number of units, grandfathered or not, etc.) was on the first page and everyone knew where to look for what.

Now, with more and more private market options available, some flood programs have gotten complicated to explain. The information is not all condensed on the declarations page. In addition, the terms and conditions can be different in every case and that is why you need the entire contract to know what you have. Once its determined that a private market is involved, then we get to discuss the Biggert Waters requirements to be sure the private policy is "NFIP compliant" or at least as broad as an NFIP RCBAP. This may require the contracts to be reviewed by a legal department and further questions follow.

I get requests all the time from banks and mortgage servicers and we continue to provide the information on an Acord Evidence of Flood Insurance form showing the bank in the certificate holder box, and checked as a "unit owner mortgagee, does not imply interest." Sometimes this satisfies the request, as worthless as it is. It is just a snapshot in time. If the policy cancels tomorrow, the bank is not notified.

In our experience, if the information is not provided, the flood gets force placed and we get in even deeper having the unit owner calling - and it is still going to be our problem to solve because no one else can. Property managers for associations we work with do not provide any insurance information and probably couldn't explain a private market program if they wanted to.

The private market options have created unintended consequences and are much more labor intensive. It is possible that some agencies have decided that since the unit owner is not their named insured, they can just say no.

getalife - thanks for the thoughtful insight.