| Why Not Just Have A Blanket Policy? | |
More and more lenders have discovered that blanket policies provide neither the cost savings not the ease of administration that they anticipated and are taking a fresh look at CPI. There are a number of reasons for this, but let's just look at costs:
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| The surest, fairest, most effective way to lower charge offs from damaged collateral, and get out from under the blanket premium, is a CPI program. | |
| Mike Gallagher | April 07, 2010 |
| Switching CPI Vendors | |
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We've been getting a few questions from lenders who are unhappy with their current collateral protection insurance (CPI) program with other companies, but who are concerned with switching vendors because they fear it would be a hassle or disrupt their operations.
It's true that IT resources are needed in a program conversion to make sure loan and insurance files are 100% compatible; however, there's a reason why State National has been transitioning CUNA mutual accounts at the rate of more than a dozen per week. Simply put, we've done this a few times, and we know how to make it work with minimal disruption. A conversion is also the right time to get your CPI house in order—assessing deductibles, assigning authority within your organization on who can waive and pay for premiums, etc. It's a good time to see if additional staff training in CPI is needed, and to determine how your provider's online training tools can help. With any program conversion or setup, there are also are management decisions that need to be made to determine program parameter s and objectives. You need to assess the different coverages that are available and how they fit your organization. But State National can help. In fact, we're so confident in our ability to pull off a seamless transition, we're willing to provide a conversion checklist to lenders—even if they don't plan on switching to us. |
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| Mike Gallagher | February 12, 2010 |
| Delinquencies & Charge-Offs | |
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The American Bankers Association reports direct and indirect automobile delinquencies and net charge-offs each quarter in their Consumer Credit Delinquency Report. Indirect loan delinquencies were at 2.77% in the 2nd quarter of 2007 and grew steadily for over 6 quarters, peaking at 3.53% in the 4th quarter of 2008. Since the beginning of 2009, there has been some improvement as delinquencies fell to 3.26%, but were still almost double what they were in early 2005. Direct auto delinquencies have seen similar trends: growing from 1.69% in the 2nd quarter of 2007 to 3.01% in the 1st quarter of 2009 and finally lowering to 2.46% in the 2nd quarter of 2009.
The same study tracked net charge-offs for the same periods. Charge-offs on indirect auto loans have risen from 1% in the 2nd quarter of 2007 to 3.22% in the 4th quarter of 2008, recently tapering to 2.68% in the 2nd quarter of 2009, still well over double what they were just two years ago. Direct auto loan charge-offs have followed the same trend, growing from 0.61% in the 2nd quarter of 2007 to 2.36% in the 2nd quarter of 2009. This means banks have been charging off more than double what they were two years ago. If you would like to see the complete quarter-by-quarter stats for delinquencies and charge-offs since 2005, please email info@statenational.com. |
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| Christin Short | November 25, 2009 |
| Something New for InsurTrak | |
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We are expanding our online capabilities! This Fall State National is introducing a new application within our InsurTrak website that enables lenders to easily and efficiently cross-market ancillary products, including guaranteed asset protection (GAP), extended warranty, and credit life/debt protection.
This loan calculator offers functionality lenders can use to automatically calculate loan payments based on any combination of GAP, extended warranty, or credit life coverages. Calculations can be represented as either a monthly or daily amount. This new app adds to an array of capabilities available to lenders through the secure InsurTrak website, including monitoring insurance status, providing full online claims reporting and administration, and delivering comprehensive management reporting. |
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| Mandy Broadwater | October 5, 2009 |
| The Alliance | |
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Great News for Credit Unions! We have formed an alliance with CUNA Mutual Group to handle all of CUNA Mutual’s automobile collateral protection insurance business. State National will provide insurance tracking, underwriting, program administration and customer service. It also entails claims administration. CUNA Mutual looked at other options and partners, but chose us because of our years of experience and focus on the product.
This alliance creates the largest CPI resource for credit unions in the marketplace and represents a significant opportunity for State National that we believe will deliver long-term benefits to our entire client base. We were interested in this alliance because it presents a real opportunity to increase our market presence. We will have greater visibility with credit unions nationwide and we will be able to bring customers more value-added services and program features. We remain committed to CPI product enhancement in order to continue to deliver unique program benefits, services, and claims advantages that other companies simply do not offer. This alliance is truly a win-win for State National and our credit union clients and we are excited about the opportunities it represents. |
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| Mike Gallagher | August 11, 2009 |
| Data Security | |
| Most of our clients are mandated by law or regulation to exercise due diligence over third party service providers, like us, because we have access to confidential borrower information. They are required to document our efforts to keep their data secure. Requests for information on State National’s safeguards have been pretty steady for the past 18 months –from lenders both big and small. Fortunately, with our SAS 70 audits, network certification from a division of McAfee and our updated (because of our recent move to Bedford, Texas) business continuity plan, we’re in good shape to satisfy these requests. | |
| Mike Gallagher | June 18, 2009 |
| New Headquarters | |
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State National moved over Memorial Day weekend to an 18-acre campus in Bedford, Texas. It’s approximately five miles northeast of our previous headquarters and about five miles from the DFW Airport.
One of the reasons for the move is that CPI is a highly specialized product that we believe requires a centralized operation. Effective service delivery requires integration and communication among several departments. That is why, unlike other providers with multiple, scattered service or data centers, we have a strategy of centralization. Our new space is actually designed for CPI. Traffic flow is set up for collaboration among claims, underwriting, call center, client support, and management staff. It’s only been a few days, but so far, so good. |
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| David Crawford | May 28, 2009 |
| Does CPI Cause Delinquencies? | |
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Some lenders tell us that they fear adding the cost of force-placed, CPI to loan balances will increase loan delinquency. However, experience shows that most repossessions covered by CPI are already delinquent before payments are ever adjusted.
In fact, CPI can be a predictor of delinquency. When a borrower lets private insurance lapse, it is usually a sign that deeper financial problems exist. In addition to providing lenders with information on insurance status, tracking systems offered by CPI providers are an important resource in the collection and recovery processes. |
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| Mike Gallagher | April 4, 2009 |
| Unemployment Rate Tied to Uninsured | |
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Earlier this year, various newspapers around the country reported that the rates of unemployment and uninsured drivers rise and fall together, according to the Insurance Research Council's latest study.
The scary part of the study was that the national average of uninsured drivers was almost 14% at a time when the national unemployment rate was less than 5%. With the unemployment rate today over 8% and projected to go higher, the uninsured average is projected to grow 3 points or more as well. What does this mean for lenders? It means that in today's economic environment, it is more important than ever to protect your auto loan portfolio. |
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| Mike Gallagher | March 16, 2009 |
| We're Blogging | |
| Welcome to the new State National blog. We are going to use this space to primarily discuss collateral protection insurance (CPI). It's unlike other insurance products and often misunderstood by lenders and users alike! We trust it will be useful so please visit often. And if you would like a specific topic discussed or have a question, feel free to send an email to info@statenational.com. | |
| Mike Gallagher | Feb. 21, 2009 |