Q: DISCRETIONARY 3. How can a lender evaluate the sufficiency of an insurer’s solvency, strength, and ability to satisfy claims when determining whether a flood insurance policy provides sufficient protection of the loan, consistent with general safety and soundness principles?
A: A lender may evaluate an insurer’s solvency, strength, and ability to satisfy claims by obtaining information from the State insurance regulator’s office of the State in which the property securing the loan is located, among other options. A lender can rely on the licensing or other processes used by the State insurance regulator for such an evaluation. See Q&A Discretionary 4.