What to Look for in a CPI Provider

Editor’s Note: This was originally published by State National on its blog as part of a three-part series.

If you decide CPI is the right choice for protecting your financial institution’s portfolio, choosing the right CPI provider will save you time and benefit your bottom line. When shopping for a CPI program, lenders should seek a partner that best fits its lifestyle, values, needs and philosophy.

A quality CPI provider will try to avoid placing insurance by diligently notifying borrowers when they have identified a lapse in insurance. They will also provide borrowers with easy and hassle-free ways to update their insurance information and avoid CPI coverage on their vehicles.

How Is a High-Quality CPI Program Run?

As previously mentioned, when lenders contract with a provider to track the insurance status of each loan in their portfolio, the provider will receive data files on all new loans, verify that acceptable physical damage coverage is in force and ensure the borrowers’ insurance companies have the lender named as the lienholder. The provider will also receive regular updates on existing loans in the lender’s portfolio and process proof of insurance information when a private insurance policy is issued, canceled or materially changed.

A high-quality program will have technology and processes in place that enable the provider to complete these verifications as close to real-time as possible. This avoids unnecessarily communicating with borrowers who are complying with the requirement to purchase and maintain private insurance.

If a borrower does not obtain insurance coverage for loan collateral, it is the provider’s job to urge the borrower to do so. Throughout the life of a loan, proof of insurance is monitored to ensure that policies remain in force; if policies lapse, borrowers are sent notices advising them to reinstate coverage.

A high-quality program will communicate with borrowers in multiple ways, including mailed notices, email and text messaging. It will also offer resources, such as videos that address a borrower’s specific situation, to help educate them in clear, understandable terms about why they are being notified and what they need to do next.

Should a borrower fail to respond to multiple notifications over a period of time, the provider will notify the lender, who may choose to place CPI on the borrower’s loan. If a borrower purchases or reinstates private coverage, the CPI policy is canceled, and a premium refund is issued. A high-quality CPI program will include technology to automatically calculate premium changes and refunds quickly and accurately.

Throughout the process, the provider will monitor all processes and respond to inquiries from lenders and borrowers. The highest-quality programs will provide lenders with robust online tracking tools, transparent access to program information, immediately available borrower call recordings, and detailed management reporting on their CPI program, among other features.

How Much Lender Participation Is Required?

A top-quality provider will offer a program that requires minimal work to administer. This frees your staff from handling routine administrative tasks associated with insurance tracking and provides access to real-time updates. Lenders simply need to forward insurance-related documents and provide a loan file on a pre-agreed schedule.

Look for a Seamless Experience for Your Staff and Your Borrowers

Because CPI placement is determined by the status of underlying insurance, CPI requires a high level of service, monitoring and management to avoid erroneously placed insurance. A CPI provider’s ability to quickly identify any lapse or impairment in coverage directly correlates to saving a lender time and money.

A combination of effective tracking technology and personal, customer-focused service helps ensure that all placements are made accurately, refunds are issued promptly, and requests are handled expediently. This will minimize work for your staff and protect your borrower relationships.

• Look for a program with a dedicated service team and a contact phone number unique to your financial institution; this provides more personal service and the ability for the provider to respond to borrowers’ questions and needs promptly and courteously, enhancing the relationship between lenders and borrowers.
• To minimize unnecessary notices and placements, seek a provider that offers an advanced and highly efficient technology platform. Advanced technology that offers quick and accurate processing of incoming insurance information will ensure that communication with borrowers is always based on the most current information. The provider you choose should also have technology that allows borrowers multiple hassle-free ways to update their insurance, including email and interactive texting as well as online and by phone or fax.
• Look for ease of use and transparency in the provider’s tracking and reporting system. Will your staff have to log in to several systems or just one? Will you be able to view every notice sent, see the complete insurance history of every borrower, and listen to all recordings of borrower phone calls immediately and on demand, right in the system? Does the system have robust reporting capability and easily accessible management reports?
• To avoid chasing down documentation and delays in claims payment, partner with a provider that minimizes paperwork and makes use of sophisticated technology to pay claims either instantly or within days after submission instead of the industry average of several weeks.
• Seek out a provider that believes “what gets measured gets managed” and constantly tracks both client satisfaction and borrower satisfaction to be sure it is providing superior service levels. The use of surveys, monitoring and metrics helps ensure borrowers and staff are happy and satisfied. A company that regularly calculates its Net Promoter Score given by its clients shows it takes satisfaction seriously.
• Ideally, your provider will specialize in portfolio protection, with systems and processes developed specifically for and built around these specialized functions. A provider that is committed to continual improvement and opportunities for you to have a say in future enhancements to products and services can also help build a successful and enduring partnership that best serves your institution in both good times as well as challenging ones.

While it’s impossible to avoid all risk (other than by stopping writing loans altogether), a high-quality CPI provider can help you, the lender, find a point of equilibrium at which the protection provided by the program complements the level of risk that your institution is willing to assume—while minimizing friction and noise and protecting your borrower relationships.

VP/Insurance Solutions Loren Shelton manages the underwriting, claims and new business implementations for a portfolio of more than six million loans at CUESolutions Bronze provider State National Companies, Bedford, Texas, a division of Markel Corporation. With more than 15 years of experience, Shelton has extensive knowledge of SNC’s collateral protection products.