Pre-Implementation Analysis
OCC Bulletin 2004-56 mandates that, due to the uniqueness and complexity of BOLI transactions, banks purchasing BOLI should conduct a thorough analysis (Pre-Implementation Analysis) to ensure that informed decisions are being made consistent with safe and sound banking practices. The Bulletin outlines nine key steps to follow:
- Determine the need for insurance
- Quantify the amount of insurance needed
- Vendor selection
- Carrier selection
- Review of characteristics of available insurance products
- Determine reasonableness of compensation
- Analyze associated risks and bank’s ability to respond to those risks
- Evaluate alternatives
- Document decision