Just wondering if the norm now on consumer flood is to require the maximum deductible for all loans?
Also, is it now the norm on consumer flood insurance when the " lesser of the 3 " is NFIP $250,000, to only require that coverage or if anyone is requiring more in Private insurance with larger loan amounts? As compliance I am being told that we are not being competitive if we require more coverage. Flood coverage over the max NFIP is not a requirement but is a risk. Is there anywhere in Safety and Soundness that this is covered for that risk? Has anyone been reviewed for this with Safety and Soundness? Looking to be as knowledgeable as possible.

How can you "require" the maximum deductible? Do you mean allow it?

Depends on your internal risk process and your portfolio. I was once in a bank and pointed out to the president that his commercial loan portfolio located in a flood zone that was currently uninsured represented over 100% of his capital.

Thanks for your response. Sorry, I didn't explain myself well. If the lesser of the three is NFIP $250,000 and that is what we use in underwriting to get NFIP insurance, but our loan amount is much higher and we have the option to require more private insurance, do most Banks just take the risk and not require the extra coverage they can do through private insurance? We have always been risk adverse and now with some new production staffing, Im being told that if we ask customers to get more private insurance to lessen our risk we are not going to be competitive in the market. Is that what is happening in the marketplace? I was looking for other Banks to tell me if they are now taking on this risk and not requiring. Is there anything in S&S examination manuals that addresses these risks? I couldn't find anything.

Our bank has had some cases where the dwelling and loan amount were so much higher than $250,000 that we required more then $250,000 in flood insurance coverage. Housing costs have increased substantially in our market.

I personally believe that it should be built into the credit underwriting piece. I have a house loan of $1MM and if totally destroyed in a flood, can I pony up the $750,000 to pay off the loan? Same with commercial properties.