Reporting Institution for Cash Value Insurance Policy is Insurance Company
Custodial Account does not include holding assets for an Insurance Contract
The CRS describes twice that a Custodial Account does not include assets being held on behalf of an insurance contract:
This means a custodian bank for insurance policy does not review the assets it is holding for an insurance contract. This is to prevent duplicate reporting by both the custodian bank and insurance company.
The reporting institution for an insurance contract is the insurance company, not the custodian bank
CRS Commentary page 176 par(62)
An account would be considered to be maintained by a Financial Institution in the case of a cash value insurance contract by the Financial Institution that is obligated to make payments with respect to the contract.
Note the custodian bank does not make payments with respect to te insurance contract to the policyholder or beneficiaries. It is the insurance comany that makes this payment. The custodian bank is merely holding assets for another FI, the insurer.
FATCA Definition of Custodial Account
The term custodial account §1.1471-5(b)(3)(ii)
...means an arrangement for holding a financial instrument, contract, or investment (including, but not limited to, a share of stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a nonfinancial index, a notional principal contract as defined in §1.446-3(c), an insurance or annuity contract, and any option or other derivative instrument) for the benefit of another person.Note for FATCA, a Custodial Account includes assets maintained for an insurance contract by a Financial Institution. FATCA attempts to prevent duplicate reporting on insurance contracts by stating the FI responsible for reporting on Cash Value Insurance Contracts is the FI responsible for making payments regarding the insurance contract. In any many custodian banks do not identify the policyholder of an insurance policy because they recognise the assets belong to the insurance company. In this case, incorrect reporting for FATCA by the custodian bank will be impossible as they do not have the policyholder details.
Brief on why for the CRS, custodian institutions such as banks holding assets for insurance policies do not have a Custodial Account to review.