Insurance Vendor Management has many different components. Many financial institutions oversimplify insurance management into just a few areas: size, ratings, stability. The problem with oversimplifying insurance vendor management is that many companies may look strong on paper but lack good customer service, claims handling, and adequate coverage in their policies. It is not prudent Vendor Selection and Management to have a large, financially strong, A+ rated insurance company with poor service and claims handling.
My job involves talking with community lenders on a daily basis. Specifically, I work with credit union and bank executives on their collateral portfolio insurance. This includes consumer, mortgage, and commercial equipment portfolios. I am regularly surprised to find that many managers, executives, and others are unfamiliar with the policies they have in place or how they manage risk in their portfolios. While being a leader in a lending institution carries dozens of responsibilities across multiple departments and disciplines, keeping on top of your insurance is something you can’t let fall by the wayside. Not only are uncovered or under-covered losses unacceptable, but in-depth knowledge of your policy can help with compliance. As a new year approaches, here are some good questions to ask yourself and your staff to make sure you have the best possible grasp of how your collateral portfolios are protected.
2021, much like 2020, was a robust year for mortgage lending with a continued strong pipeline of new home purchases and refinances. The general consensus seems to be this trend will continue into 2022, with a decline later in the year if the expected rate increases actually occur.
The end of each year is most special to us as we take time to reflect upon the many blessings for which we can give thanks. Our credit union and bank clients are some of these—especially because of their like-minded attitudes of gratitude for their own members and customers.
Have You Reviewed Your REO Insurance Policy Lately?
As the foreclosure moratorium initiated by the CARES Act during the pandemic comes to an end, tens of thousands of distressed home buyers are starting to come out of forbearance agreements which suspended monthly mortgage payments for a year or more for many borrowers. It’s important to note that forbearance agreements do not waive payments, but they must be paid back with interest according to the terms provided by the lender. This will inevitably lead to a significant increase in foreclosed and bank-owned properties in the next year and beyond. Does your financial institution have the proper REO insurance policy in place to weather the storm?