Credit Unions as member-owned cooperatives have always kept their focus where it should be: their members. Credit Unions constantly make sure everything that is done is member friendly and that members know they are part of the family. More and more credit unions are re-evaluating internal programs to make sure they live up to the goals they set concerning member relationships. One product receiving a lot of attention is Collateral Protection Insurance (CPI or Force-Placed insurance) with outsourced tracking.
When it comes to collateral protection insurance, lenders have more options than ever before. As lenders find out about the expanding use of Blanket Insurance to protect loan collateral, some questions come to mind. This article will help you sort through what is available and determine what options to look at for your financial institution. Should you continue to track and force place? Should you outsource tracking and have the tracker send letters and force place? Or should you move towards blanket insurance protection and eliminate as much of the tracking and force-placing as possible?
During 2019 several insurance tracking vendors have canceled their relationships with numerous lenders throughout the country. Unfortunately, these vendors in many cases did not give adequate notice or time for the lenders to react and find an alternative. If you have already been forced to make a quick decision or are facing that decision, this blog post covers some options for you.
It is very common for community lenders to acknowledge the shortcomings of insurance tracking and force placing CPI coverage on borrowers. We often hear from community lender executives and collection departments, that even though CPI coverage and outsourced tracking still entails a lot of work and causes a lot of problems, they really don't see any other solution other than switching to another insurance tracker. Many are very excited to find out that there is another option.
As a community lender, you believe that your service and product are by far an overall better value for your customers than larger regional or national lenders you compete with. Why do you believe that and why is it actually true?
Many lenders using Collateral Protection Insurance or a CPI / force-placed type of product for their consumer loan portfolios are unaware of the potential ramifications that they may face if their programs are not administered correctly by the provider. I say “their” programs intentionally because to borrowers the CPI or Collateral Protection Insurance product is your program and to regulators and class action attorneys CPI was your choice to insure your loans - (and guess who has the deepest pockets)?