Extreme heat. Wild fires. Catastrophic storms.

Any of these can wreak havoc on insurance firms, but a case involving Birmingham’s Regions Bank this week might be a sign of things to come.

The Federal Reserve Board on Tuesday fined Regions approximately $2.95 million for unsafe and unsound practices in its flood insurance compliance program and for flood insurance regulatory violations.

Regions agreed to the fine, without admitting or denying the allegations, on Aug. 14.

While this is believed to be the largest penalty issued against a bank by the Federal Reserve for an infraction of this kind, it calls for a little perspective.

For example, Regions paid out a much larger sum last year in an unrelated case – $141 million in penalties and refunds in a settlement with the Consumer Financial Protection Bureau.

What is more, Regions self-identified the issue several years ago.

The fine dealt with a period of about a year where Regions did not effectively monitor “a significant number of home equity loans and home equity lines of credit subject to the Flood Act for compliance,” according to the order.

The issue apparently did not affect any customers.

“We took corrective action and remediated the issue by 2017,” Regions Vice President, Media and Public Relations Manager Jeremy King said.

“There was no customer impact as the matter was confined to our own internal monitoring of flood insurance policies on certain properties. Today, years after correcting the issue, we are pleased to now fully resolve this legacy matter.”

About $58,000 of the bank’s penalty will go to the National Flood Insurance Program, with the rest paid to the Federal Reserve System and the U.S. Treasury.

But Insurance Journal wondered if the Federal Reserve’s action could be an indicator of things to come.

In June, Treasury Secretary Janet Yellen said extreme weather events are exposing significant gaps in insurance protection for American homeowners.

Insurers are raising rates on homeowners, while some companies have chosen to stop offering coverage in states considered to be at high risk, such as California and Florida.

“More households are turning to residual markets for coverage or are foregoing insurance entirely,” Yellen said, according to Insurance Business.

For the record, Insurance Journal reached out to a Federal Reserve spokesperson on whether it will step up insurance-related enforcement actions.

The spokesperson declined comment.