Our Bank sometimes has to force place flood insurance on some customers for a short period of time, as these policies are very expansive, and customers go out and purchase their own policies fairly quickly.
My question is are these insurance companies that we purchase flood policies from should be considered "Third Party"? Currently, we look at them as out of scope, and don't really conduct much of a due diligence accept running them thru AM Best.
I would appreciate your input.
Yes, Flood insurance providers would be considered third parties for insuring against risk that your customers have undertaken contractually by obtaining a mortgage through your bank (or something of that nature).
By definition, a third party is a company or entity with who you have a written agreement to provide a product or service on behalf of your organization to your customer or upon whom you rely for a product or service to maintain daily operations. This is your vendor and one that you "own" as part of your business. Therefore, the insurance companies that you work with on your bank's customer base which require force placed flood insurance are your bank's third parties.
Hope this helps and interested in what others are doing.