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#2202847 - 01/14/19 03:37 PM Private Flood Insurance Application Requirements
Nicki D Offline
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Good Morning! We have a loan closing this week and the property is located in a SFHA. The borrower has submitted an application for private insurance and we will be obtaining proof of payment prior to closing. The application contains everything we need with the exception of the loss payee clause. However, the insurance company has issued us a binder listing the bank as loss payee. Our loan officer contacted the insurance company and told them we needed the application to reflect the bank as loss payee and they stated their application system doesn't allow for them to include that information. I know binders aren't acceptable under the NFIP but since this is private policy would this be sufficient to evidence the loss payee? Thanks in advance for any guidance!

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Flood Compliance
#2202854 - 01/14/19 04:05 PM Re: Private Flood Insurance Application Requirements Nicki D
rlcarey Online
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Should be fine - I would be more concerned with accepting a private policy without reading the actual policy to make sure that it is comparable to an NFIP policy as far as coverage and cancellation notification requirements.
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#2204104 - 01/28/19 02:18 PM Re: Private Flood Insurance Application Requirements Nicki D
ahou Offline
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ahou
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Final amendments are out for private flood insurance. Effective 7-1-19.
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#2204109 - 01/28/19 02:30 PM Re: Private Flood Insurance Application Requirements Nicki D
rlcarey Online
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#2204947 - 02/04/19 04:24 PM Re: Private Flood Insurance Application Requirements Nicki D
Soccer Offline
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We have our first private policy and everything is in order except the Licensure part. The policy states that the Insurers named herein is not licensed by the State of New York. It is a Lloyd's policy and I referenced the NAIC list of alien eligible insurers with a lot of Lloyd's listed we just could not back into the reference number.

What are others doing when presented with this challenge?
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#2215272 - 06/07/19 07:22 PM Re: Private Flood Insurance Application Requirements Nicki D
Mel in WA Offline
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I'm developing a checklist for private flood insurance policy review. Almost all of the private policies we have received over the past few years are Lloyds and have been licensed/approved by the insurance regulator to do business in our state. Do we need to look this up at https://naic.org/index_consumer.htm each and every time?

Of course, we are hoping they add the compliance aid statement so we don't even have to go there.:)

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#2215315 - 06/10/19 05:31 PM Re: Private Flood Insurance Application Requirements Nicki D
Mel in WA Offline
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Bump

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#2215456 - 06/11/19 08:25 PM Re: Private Flood Insurance Application Requirements Mel in WA
J Van Horn Offline
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Coppell, Texas
When you see the carrier name "Underwriters at Lloyds London" (or variations like "Lloyds of London" or "Certain Underwriters at Lloyds"), you are looking at an Surplus Lines policy unless the insured is located in Kentucky.

To confirm whether or not Lloyds is an approved Surplus Lines insurer, you have to go to the state Surplus Lines Department or Office home page. Some states, like Hawaii, do not maintain "authorized" or "approved" lists - just "unapproved" or "disapproved" lists.

Illinois licenses their Surplus Lines carriers, and so all Surplus Lines carriers for Illinois insureds should be verifiable through NAIC site; for all other states, you have to research how the state manages it.

Locke Lord publishes a surplus lines manual each year - great resource for keeping track of how each state manages their surplus lines insurers: https://surplusmanual.lockelord.com/eligibility/

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#2215712 - 06/13/19 08:35 PM Re: Private Flood Insurance Application Requirements Nicki D
scb2011 Offline
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Does the new FDPA requirement that is effective 7/1/19 allow a bank to only accept private policies that include the compliance aid statement?

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#2215721 - 06/13/19 10:50 PM Re: Private Flood Insurance Application Requirements Nicki D
rlcarey Online
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No. If it otherwise meets the requirements, you have to accept it.
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#2215887 - 06/17/19 07:53 PM Re: Private Flood Insurance Application Requirements J Van Horn
MarieR Offline
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J Van Horn, Could you expand on the "Surplus Lines policy unless the insured is located in Kentucky"? I'm in Kentucky and we have a policy or 2 underwritten by Lloyds. I have to admit I'm still learning about the requirements for surplus lines.
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#2215972 - 06/18/19 08:56 PM Re: Private Flood Insurance Application Requirements MarieR
J Van Horn Offline
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Coppell, Texas
Originally Posted By MarieR
J Van Horn, Could you expand on the "Surplus Lines policy unless the insured is located in Kentucky"? I'm in Kentucky and we have a policy or 2 underwritten by Lloyds. I have to admit I'm still learning about the requirements for surplus lines.


Lloyds ("Underwriters at Lloyds") is an admitted insurance carrier (NAIC#32727) for Flood and other lines of insurance in Kentucky. To bypass what was deemed a burdensome amount of red tape, Lloyds made the decision to file forms with the state of Kentucky several years back.

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#2215992 - 06/19/19 12:23 PM Re: Private Flood Insurance Application Requirements Nicki D
MarieR Offline
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Thank you for clarifying. I was afraid that it meant they couldn't issue policies here. Thank you so much
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#2216041 - 06/19/19 05:40 PM Re: Private Flood Insurance Application Requirements Nicki D
banker-12 Offline
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On the Texas Dept. of Insurance (TDI) website there is a disclaimer that states that TDI does not license surplus lines. They have a search report that list surplus lines agents and agencies; the search report has their license expiration date. So if they are stating that they do not license surplus lines, why is there a license expiration date on this report? Is it from their state and not Texas? Does this count as being "recognized" in the State which the property is located?

I found the surplus line agent and producer on the TDI search report but not Underwriters at Lloyd's. I could not find all three on the NAIC website?

Thank You.

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#2216134 - 06/20/19 02:57 PM Re: Private Flood Insurance Application Requirements Nicki D
mdog76 Offline
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Tagging along to this thread.

If a private policy does not contain the compliance statement, are banks allowed to not accept that policy based on that or is a full review of the policy still required?

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#2216136 - 06/20/19 03:00 PM Re: Private Flood Insurance Application Requirements Nicki D
RR Joker Offline
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No. You still have to accept one without the statement if it meets the guidelines.
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#2216138 - 06/20/19 03:29 PM Re: Private Flood Insurance Application Requirements Nicki D
Adam Witmer Offline
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Joker is correct (as usual). wink The compliance aid only helps if it is there. If it isn't there, you still have to make a determination as to whether or not the policy meets the definition of "private flood insurance."
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#2216208 - 06/21/19 01:10 AM Re: Private Flood Insurance Application Requirements banker-12
J Van Horn Offline
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Joined: Sep 2012
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Coppell, Texas
Originally Posted By banker-12
On the Texas Dept. of Insurance (TDI) website there is a disclaimer that states that TDI does not license surplus lines. They have a search report that list surplus lines agents and agencies; the search report has their license expiration date. So if they are stating that they do not license surplus lines, why is there a license expiration date on this report? Is it from their state and not Texas? Does this count as being "recognized" in the State which the property is located?


Surplus Lines carriers are different from surplus lines agents. Texas does not license the carriers (the insurance companies), but they do license the agents/producers (the people who sell you the insurance). But! Just because TX doesn't license the carriers, doesn't mean they don't maintain a list of authorized carriers wink

https://www.sltx.org/insurers/eligible-insurer-list/eligible-insurers/
Eligible Lloyd's Syndicates** for Lloyd's policies and Eligible Insurers for other carriers

ICYI: To access a non-admitted carrier through the surplus lines market, one must go through a surplus lines agent (agent, broker, producer, etc). In most states, unless you meet the definition of an Exempt Commercial Purchaser, the licensed agent must perform a diligent search to ensure that the type of insurance requested is not readily available in the admitted market. After confirming it is not, the surplus lines agent may connect to a surplus lines insurer to procure the desired coverage.

**Lloyd's policies contain a Market Schedule which will list the related syndicates and % of the risk that each syndicate covers. Commonly, the schedule will include the following:

Syndicate name or pseudonym - a three-character reference number for the company name (ex. "KLN" is the pseudonym
for Tokio Marine Kiln)

Number - the syndicate number <<<< this is the syndicate code and what you're checking on SLTX's "Eligible Lloyd's
Syndicates" page (ex. Tokio Marine Kiln's syndicate number is 510)

Signed Line - the syndicate's at risk stake in the policy; think of it as the "% insured" - when you see a limit of coverage,
that's the % of that limit that they are responsible for paying in the event of a covered a loss

Reference - a market reference number for Lloyd's identification; think of this as an internal (Lloyd's) license number.

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#2216424 - 06/25/19 07:33 PM Re: Private Flood Insurance Application Requirements Nicki D
banker-12 Offline
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Thank You.

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#2216524 - 06/26/19 04:30 PM Re: Private Flood Insurance Application Requirements Nicki D
Moman Offline
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Posts: 505
WA
For what it's worth, I saw our first "Compliance Aid" statement in a Lloyds private policy that renewed in May. Hopefully all fall in line with the Compliance Aid statement!

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