Bank owned life insurance (BOLI) vendors generally represent banks in the vast majority of BOLI purchases as acknowledged by Bulletin 2004-56. The guidance reaffirms the importance of careful vendor selection. In choosing a vendor, consideration should be given to the adequacy of the vendor’s services, and its reputation, experience, financial soundness and long-term commitment to the BOLI marketplace. OCC Bulletin 2004-56 lists the following criteria to consider when selecting a BOLI vendor:
- Ability to honor long term commitments
- Adequacy of vendor’s services
- Adequacy of vendor’s reputation
- Adequacy of vendor’s experience
- Adequacy of vendor’s financial soundness
- Commitment to the BOLI product
- Commitment to investing in operational infrastructure to support BOLI
- Ability to adequately identify and explain risks as well as benefits related to the BOLI purchase
BOLI is a long term commitment. Banks should choose a vendor with expertise, systems, support staff, staying power and capital adequacy to assure the program’s success by anticipating risk and optimizing rewards well into the future.
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