In the wake of COVID-19, the CFPB has shifted over half of its supervisory activities to “Prioritized Assessments” (PAs). PAs were designed to obtain real-time information to analyze pandemic-related market developments to determine which markets were most likely to pose risk to consumers. Auto loan servicing was the first target of their Summer 2021 Supervisory Highlights report. In this recent issue, the agency has identified several unfair acts or practices related to Lender-Placed Collateral Protection Insurance.
These days, it’s easier than ever for consumers to arrange their auto insurance online. Just think about it. There is everything from fintech platforms to self-service solutions that give consumers the power to choose the insurance product they need when they need it.
Force-placed CPI insurance is frustrating, cumbersome, and expensive. Is there a better way to transfer the risk that CPI covers? A credit union executive recently shared the thought that “those expensive force-placed premiums just don’t feel right.” It was clear that the CPI (Collateral Protection Insurance) model of tracking insurance and then force-placing expensive insurance premiums onto their most vulnerable members did not sit well with her. She said, “there has to be a better way.” In the big business of CPI, it is rare that other alternative options are offered or even discussed by the big CPI vendors. Might the huge premium dollars of force-placed insurance be shielding more efficient and member-friendly solutions that exist out in the marketplace?
As the economy recovers, things have taken an interesting turn in the home lending sphere. Most lenders are flush with deposits, having seen a massive increase in 2020 and early 2021. This trend is expected to continue throughout 2021. At the same time, many larger banks and lenders paused their HELOC applications while the economy was on shaky ground.
Few aspects of modern business have gone untouched by the digital transformation of the last decade. For banks and credit unions, technology has rapidly transformed how they communicate with customers. Younger tech-savvy consumers have grown up comfortable interacting in a myriad of ways with financial institutions. With more data and analytics available than ever, lenders can tailor their approach to become more efficient and results-focused in their interactions.
As I meet with lenders across the Western United States, there is a strong aversion to talking about insurance in general. Insurance is a product that nobody wants to think about until it is needed, and everybody wants to pay as little as possible for their lender coverage. There is a particular aversion to talking about insurance for lending institutions, and I often joke that it is because we are mixing two of the most boring industries in the world. Due to the particularly dry nature of it, I spend nearly all of my time talking at a high level about insurance coverages. Those conversations typically reference the benefits of Unitas Financial Services’ innovative approach to blanket insurance coverages for lending institutions. On the rare occasion that I do get to dive into the intricacies of insurance coverages, I often run into a lender that uses a blanket mortgage impairment policy. While blanket mortgage impairment policies provide a similar benefit at a high level (eliminate the need to track and force-place insurance while still protecting collateral), they do not compare to a full Unitas Blanket Mortgage policy, especially when it comes to flexibility, getting claims paid fast, and the overall coverage.