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Newsletter: Volume
2, 2007
Remote Deposit Capture
 Banks
are beginning to offer a new service to their business
customers. Business customers at some banks can make their
deposits literally without leaving their places of business.
With acquisition of the proper technology and bank approval,
bank customers scan the checks to be deposited into the
equipment provided. The equipment develops “electronic checks”
which are transmitted to the bank for deposit to the business’
account. The electronic checks are charged against other
customer accounts or forwarded to the Federal Reserve Bank or
the bank’s correspondent bank to be forwarded to the banks on
which the checks were drawn. (In some cases the banks receiving
the electronic deposit “reconvert” the electronic checks to
paper documents for further processing.) This new service offers
the obvious benefits to the customer of not having to go to the
bank. It also benefits the bank in that it reduces the number
of teller transactions and paper checks that flow through the
bank.
With the
benefits, however come risks. One of the major risks involves
the bank customer retaining the original check. There is the
risk of the original paper check being negligently or
fraudulently presented for deposit at the bank where the remote
deposit was made or another bank. Under this scenario when the
original paper check is also charged against the account of the
drawer of the check, the drawer presumably will refuse payment
as a duplicate. The paper check will charged back against the
bank of deposit and it will be the bank of deposit’s
responsibility to collect from the depositor.
To address this
risk and other risks, banks utilizing remote deposit capture
should develop an application process to screen prospective
customers who wish use the service. Decisions to allow use of
remote deposit capture should consider such factors as, how long
has the prospective remote depositor been a customer of the
bank, account history (overdrafts, non sufficient fund checks,
etc), nature of the business, financial condition of the
business, length of time in business, etc.
If a decision is
made to allow remote capture deposit, the customer should
be required to sign and abide by a comprehensive agreement. The
agreement should address such issues as duties and liabilities
of the customer and the bank and the procedures to be followed
by the customer.
One of the
issues that should be addressed in an agreement is the liability
in the event an original paper check is accepted for deposit by
the bank in addition to the “electronic check.” It is this
writer’s understanding that under the Check Clearing for the21st
Century Act (Check 21) the bank forwarding the remotely
deposited electronic check is liable in the event that the
original paper check or duplicate is presented for payment. But
Check 21 does not access any liability on the customer who
remotely deposited the check. Therefore, it is very important
that the agreement contain a provision requiring the depositor
to accept liability for any duplicate deposits.
Given the risks
of duplicate deposits, the required procedures for banks should
address methods of minimizing this risk. One possibility is the
placement of the wording such as “scanned or processed” on the
paper check when it is transmitted. The agreement should also
address how long the original paper checks should be retained by
the customer, the security under which these checks are held and
method of destruction.
There are other
issues to consider that are beyond the scope of this article.
While remote capture deposit can be a benefit for the bank and
its customers, it should be carefully considered before this
service is offered.
BancInsure has
become a leading writer of Financial Institution Bonds and
Directors’ and Officers’ Liability Policies in the United States
by providing a sound, stable market, excellent service and fair
claims service. If you would like to learn more about
BancInsure coverages, please contact your BancInsure marketing
representative.
The Flood Insurance
Agency Forms Strategic Marketing Alliance with BancInsure, Inc.
 The Flood Insurance
Agency (TFIA) has entered into an agreement with BancInsure,
Inc. wherein BancInsure will market TFIA’s total flood
insurance compliance solution to their existing client base of
approximately 2200 community banks and will utilize the flood
compliance solution to attract new bank clients.
Rod
Sargent, CEO of BancInsure, signed the agreement with TFIA
today. “TFIA and their full compliance solution reflects the
type of relationship we seek as the premier provider of risk
management solutions for community banks,” says Sargent.
TFIA
markets FEMA standard flood hazard area determinations, FEMA
standard flood insurance policies and FEMA lender placed flood
insurance. A new private label program provides BancInsure with
a name branded online instant response zone determination
website, bancinsure.floodcert.com. A second private label
program,
www.bancinsureflood.com, advertises the BancInsure name and
logo on FEMA standard flood insurance policies.
A
third website, www.MPPPFlood.com, is an automated solution for
keeping lenders' loan portfolios in compliance with federal
flood insurance regulations. The automated system allows lenders
to instantly calculate lender placed flood insurance premiums,
print FEMA required warning letters, generate applications to
place insurance, and print all documents required to cancel a
policy. MPPP policies are the only lender placed policies whose
claim payments are funded by the United States Government.
"Possibly the most unique and well accepted feature of
MPPPFlood.com is our patent pending OSPCP," said Evan Hecht,
Chief Executive Officer of TFIA. "It is the first lender placed
flood insurance program that clearly shows borrowers the benefit
of replacing a lender placed flood policy with a policy they
choose to purchase themselves."
The
optional standard policy conversion is comprised of a series of
automated letters sent to borrowers by TFIA encouraging the
borrower to contact their staff of licensed flood insurance
professionals. Lender clients can choose to opt in or out of
Optional Standard Policy Conversion Program (OSPCP). Moreover,
each lender can choose online which borrowers they would like to
enroll in the program. Both MPPPFlood.com and OSPCP are provided
to lender clients of TFIA free of charge.
The Flood Insurance Agency (TFIA) is a technology-driven,
independent insurance agency devoted entirely to providing flood
insurance solutions to individual property owners, insurance
agents, mortgage lenders and public housing authorities. The
Company's website, offers National Flood
Insurance Program (NFIP) flood insurance quotes and FEMA
Standard Flood Hazard Area Determinations. The Company markets
www.MPPPFlood.com , the first software to automate FEMA's
Mortgage Portfolio Protection Plan (MPPP) lender placed flood
insurance program. The Company services clients in 50 states and
the District of Columbia, and is headquartered in Kalispell, MT.
BancInsure Announces
Appointments
Rodney N.
Sargent |
BMSI
Holdings, the holding company for BancInsure, Inc, announced a
number of promotions and appointments following their annual
shareholders meeting in Dallas, TX.
Rodney N. Sargent was appointed
President of BMSI Holdings and Chief Executive Officer of the
companies, and was elected a director of the company.
Sargent, 45, joined the company in
December 2006 as President of BMSI Marketing, Inc, the sales and
marketing arm for BancInsure. His experience includes executive
management with several national insurers, including executive
roles with Seattle-based Safeco as Corporate Marketing Officer
and Corporate E-Commerce Officer. Mr. Sargent was also the
Vice President of Marketing for the Property & Casualty
Companies of United Services Automobile Association (USAA).
Prior to joining BancInsure, Mr. Sargent was Corporate Vice
President and Chief Marketing Officer for Argonaut Group.
Rodney Sargent is a graduate of
Portland State University and Seattle University's Executive
Leadership Program at the Albers Graduate School of Business.
Barbara A.
Ewing |
Barbara A. Ewing was appointed
President and Chief Operating Officer for BancInsure, a wholly
owned subsidiary of BMSI Holdings, Inc. She was also elected as
a director of BMSI Holdings, Inc.
Ms. Ewing was most recently the
Vice President of Bond & Professional Liability Underwriting for
BancInsure, joining the company in May, 2006. She has held a
number of leadership roles with Zurich North America Financial
Enterprises (formerly The Fidelity & Deposit Company of
Maryland). She holds a B.A. from Lehigh University and is an
Associate in Fidelity and Surety Bonding.
Cynthia F.
McInerney |
Cynthia F. McInerney was appointed
Executive Vice President, Chief Financial Officer, Secretary,
and Treasurer for BMSI Holdings, Inc. and all subsidiary
companies. Cynthia was also elected as a director of the
company.
McInerney has been with BancInsure
since it’s founding in 1985, serving as Secretary, Treasurer and
Chief Financial Officer since 2003. Ms. McInerney holds a B.S.
in Accounting and an M.B.A. from the University of Illinois.
She is a member of the Oklahoma Society of CPA’s and the AICPA.
Galen T. Pate, the Company's
chairman, said: "These actions reflect our faith in the
leadership team and our commitment to the direction, strategies,
and objectives already underway. With these changes, we are
well positioned to achieve the sustained and profitable growth
we seek.”
Founded in 1985 as the only truly
independent insurer focusing completely on financial
institutions, BancInsure's understanding of financial
institutions and their intricate operations is unmatched in the
market. This translates to extraordinary value to our customers
as this understanding permeates the fiber of all areas of the
company's operation.
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