SNC Spotlight

Insurance can be complex. Turn to our blog for up-to-date, relevant content to help you make the best decisions for your financial institution. With expert knowledge from seasoned industry professionals, we simplify insurance topics so you can get back to business.
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Tackling Inflation and the Automobile Industry: A Simple Solution to Reduce Future Auto Loan Charge-offs

Despite Inflation, You Can Still Maintain a Competitive Advantage and Protect Your Auto Loan Portfolio

 

Spotlight Soundbite: The Value of Customized Portfolio Protection in the Subprime Auto Loan Market

 

 

Borrowers Are Facing Financial Stress

The government’s stimulus checks have long run out, as have the grace periods many financial institutions implemented during the pandemic. Interest rates have soared and prices have inflated. Individuals have returned to work and are again bearing the costs of gas, transportation, and childcare. While buy now and pay later programs may offer temporary relief, borrowers will ultimately not be able to put off making tough decisions about where to spend and save.

Unfortunately, a growing number of auto loan borrowers, and especially subprime borrowers, are choosing to drop or reduce their auto insurance coverage as a result of having to decide which bills to pay with their increasingly stretched paychecks. And these uninsured or underinsured borrowers pose a threat to your institution’s loan portfolio and profitability.

The news isn’t all grim, however — State National can help protect your financial institution from the risks posed by this group.

 

How to Minimize Charge-offs Caused by Uninsured Borrowers

Do you currently use an insurance tracking system to keep track of your borrowers’ coverage status in an attempt to prevent charge-offs? It’s a good start — tracking is a critical part of monitoring your institution’s risk exposure. However, having your staff track insurance in-house is a time-consuming and inefficient solution. More concerning, even if you employ an outside vendor to track coverage for you, studies show that tracking alone is not enough to encourage borrowers to keep their insurance in force.

Without a consequence for remaining uninsured or underinsured, it’s been shown time and time again that a significant portion of borrowers, particularly in the non-prime and subprime space, simply will not heed warnings to bring their loans into compliance no matter how many letters or phone calls they get reminding them to do so. Without a mechanism that will actually change borrower behavior, tracking alone still leaves too much risk in your portfolio.

A Persistent Problem — With an InsurTech Solution

The good news is, you can more thoroughly protect your portfolio while also saving labor costs and freeing up your staff to perform other tasks to grow your business. And you can do it all easily, seamlessly, and with total peace of mind when it comes to compliance. Protecting collateral from loss is most definitely not the same as it was “in the old days” — or even just a few years ago.

Advances in artificial intelligence, machine learning, and other leading-edge technology solutions have changed the game when it comes to mitigating the risk from uninsured borrowers. From software bots that can log in to insurer websites and update thousands of insurance statuses in seconds to nearly effortless multichannel borrower submission options including QR codes, email, text, web, and more, collateral protection problems of the past are simply not an issue today, especially with State National as your provider. As I like to say, “This isn’t your grandpa's CPI!”

 

Learn About State National's Secure Texting!

 

Save Time, Money, and Aggravation — What’s Not to Like?

State National’s solutions provide tracking AND protect your portfolio. We also save your financial institution time with seamless implementation and multi-option borrower insurance submission solutions. Even better, there’s InsurTrak – our custom-designed proprietary technology platform where you can view all program details in real-time with just a few clicks.

Additionally, you can personalize your coverage around exactly what works best for your business. Whether you need a full-featured, comprehensive program, one that keeps costs at a minimum for borrowers, or something in between, State National can customize a program that best fits your needs.

 

A Simple Solution for Reduced Risk and Increased Profitability

We have heard from some financial institutions that they “have no charge-offs” because they planned and allotted for a certain amount of loss. But money lost is still money lost even if you budgeted for it! What if you could save your company hundreds of thousands of dollars this year? Well, you can! Let me show you how you can leverage State National’s advanced technology and more than 50 years of experience mitigating loss from uninsured borrowers to proactively protect your business against today’s unpredictable economy and the wave of charge-offs your financial institution may be facing soon.

It’s not too late to protect your portfolio from what’s coming our way.

 

Contact Us!

Mark Baltuska
Mark Baltuska
Mark Baltuska is State National's Vice President of Finance Company Markets, offering custom portfolio protection and tracking solutions to lenders across the country, with a specialty in non-prime and subprime auto loan portfolios.

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CPI as Consumer Protection?

The Dual Advantage of Collateral Protection Insurance: A Closer Look at Borrower Benefits Collateral protection insurance is most commonly thought of as a protection for lenders. And that is certainly correct — a well-run CPI program is an undeniably powerful risk mitigation tool that helps lenders safeguard their auto loan portfolios from loss. It's one of the best ways credit unions, banks, and other financial institutions can reduce financial risk associated with lending.