Core banking systems integrate with and have become essential to most of the services modern lending institutions provide. When it comes to loan servicing, your core system is often the conduit through which the essential process of insuring collateral portfolios is performed. Maintaining appropriate insurance coverage is so important that lender insurers have developed high-tech software that interacts with a lender’s core system to facilitate that coverage. With good reason, lending managers and executives are acutely concerned with how well an insurance process will work with the institution’s core system. For that reason, when discussing Blanket Portfolio Insurance, lending executives often ask me the following questions:
Q: “How does a Blanket Insurance Program integrate with my core system?”
A: “It doesn’t need to.”
In the 21st Century, high-tech solutions are all the rage. But, for some things, low-tech solutions are simpler, safer, more efficient, and more cost-effective. Blanket Portfolio insurance is one of those things. Unlike insurance tracking programs that require software with dozens of processes and “moving parts,” Blanket Insurance covers all your loans under a single robust policy. This means your institution won’t require core system-friendly software that tracks private insurance policies, sends notices, applies force-placed premiums, refunds premiums, etc., because those processes are eliminated entirely. Removing the need for a process via a low-tech solution is more efficient and effective than streamlining that process via a high-tech solution that could be prone to errors and sensitive to software updates.
Q: “How hard is it to convert my processes to accommodate a Blanket Insurance Program?”
A: “As easy as deleting tasks from your to-do list.”
Software updates, changes, and conversions can be tiresome and complicated. Switching to a Blanket Program is not. Unlike changing tracking providers or switching insurance tracking systems, there is nothing a lender needs to do to adopt a Blanket Policy. Simply have your staff stop doing the collateral insurance tasks they were doing before (With the exception of verifying insurance at loan origination). Since there is no software to integrate and no insurance minutiae to follow, you can convert to a Blanket Insurance Policy overnight. When I am asked, “How soon can we have this Blanket up and running?” I reply, “We can have it in force tomorrow if you like.”
Q: “We are going through a core system conversion, is that a problem?’
A: “Not in the slightest.”
By now, you are getting the picture. Because of its simplicity, Blanket Insurance eliminates many of the integration problems that outdated insurance tracking programs can’t avoid. Core conversion is a big task, one that requires a lot of dedicated staff time and attention to detail to complete. Lending executives are often very reluctant to make any other changes during a conversion, and I understand that. However, if the time is right and you determine a Blanket Policy is right for your institution, the simplicity of Blanket Portfolio Insurance means that you could make the switch at any time, even during a core conversion.
We live in a world driven by technology. High-tech solutions to business problems are certainly the wave of the future. But, with an open mind and a careful evaluation of your lending institution’s needs, low-tech beats high-tech in the world of portfolio insurance.