We recently finished a compliance exam and our examiner said that they do not look at the zone on the flood policy. Because of his comment, management wants to accept "X" policies on flood loans if that's what the customer brings in. I feel that this is extremely risky and don't know how to communicate that to management. Has anyone else dealt with this? Thanks for any help in advance.

Not sure what you are asking--- as far as I know "X" and "C" are both acceptable flood determination areas with no insurance needed.

Apparently you are not examined by the FDIC because that is one of the things our examiners looked for in our compliance exam a couple of months ago.

Unless the property qualifies for the grandfather risk classification, then knowingly writing insurance in in the wrong risk zone is insurance fraud.

Do a search on the topic and you will find this discussed several times.

One example

Click here and search on fraud:

b. Discovery of insufficient premium or incomplete
rating information after a loss.

3. However, if we find that you or your agent
intentionally did not tell us, or falsified, any important fact or circumstance or did anything fraudulent
relating to this insurance, the provisions of Condition
B. Concealment or Fraud and Policy Voidance apply.

The above post is from me.