We recently acquired a bank that sells crop insurance, and we need to add a section on crop insurance to our nondeposit investment products policy. Do you have any recommendations on where we can find a sample policy on selling crop insurance?

We have not been able to locate a sample policy on selling crop insurance, but we submitted a request for a sample policy to our Compliance Division Advisory Committee and will provide any responses we receive.

Additionally, we note that if the crop insurance sold by your bank does not include an investment component, it would not be considered a nondeposit investment product subject to the Interagency Statement on Retail Sales of Nondeposit Investment Products. Also, the Consumer Protection in Sales of Insurance regulation does not apply to federal crop insurance that is sold for commercial or business purposes.

For resources related to our guidance, please see:

FDIC, Uninsured Investment Products: A Pocket Guide for Financial Institutions (March 6, 2014) (“Q. What is a nondeposit investment product? A. Any product with an investment component that is not an insured deposit is subject to the Interagency Statement. Stocks, bonds, government and municipal securities, mutual funds, annuities (fixed and variable), life insurance policies (whole and variable), and savings bonds are nondeposit investment products.”)

Comptroller’s Handbook, Retail Nondeposit Investment Products, page 5 (January 2015) (“Many banks offer retail clients insurance-related investment products as part of their comprehensive product offerings. Such products may include variable and fixed rate annuities, and life insurance contracts with investment components (e.g., whole life, variable life, and universal life products).”)

Interagency Statement on Retail Sales of Nondeposit Investment Products (February 15, 1994) (“Sales activities for nondeposit investment products should ensure that customers for these products are clearly and fully informed of the nature and risks associated with these products. In particular, where nondeposit investment products are recommended or sold to retail customers, depository institutions should ensure that customers are fully informed that the products: [1] are not insured by the FDIC; [2] are not deposits or other obligations of the institution and are not guaranteed by the institution; and, [3] are subject to investment risks, including possible loss of the principal invested.”)

Federal Reserve Commercial Bank Examination Manual, Insurance Sales Activities and Consumer Protection in Sales of Insurance (.pdf page 1132) (“The CPSI regulation does not apply to federal crop insurance that is sold for commercial or business purposes. However, if the crop insurance is purchased by an individual primarily for family, personal, or household purposes, it would be covered.”)

Federal Reserve Commercial Bank Examination Manual, Insurance Sales Activities and Consumer Protection in Sales of Insurance (.pdf page 1120) (“The following guidance pertains to state member banks that are either directly or indirectly engaged in the sale of insurance or annuity products. . . . Additionally, guidance is provided for examining a state member bank’s compliance with the consumer protection rules relating to insurance and annuities sales activities that are contained in the Board’s December 2000 revisions to Regulation H (subpart H) (12 CFR 208.81–86), ‘Consumer Protection in Sales of Insurance’ (CPSI).”)

Federal Reserve Commercial Bank Examination Manual, Insurance Sales Activities and Consumer Protection in Sales of Insurance (.pdf page 1130) (“When a bank sells insurance products or annuities that also are securities (such as variable life insurance annuities), it must conform with the applicable Federal Reserve and interagency guidance pertaining to a bank’s retail sales of nondeposit investment products (NDIPs). If the CPSI regulation and the guidance pertaining to NDIPs conflict, the CPSI regulation prevails.”)