“State National certainly saves us time and money, because of the tracking they do on the insurance. That’s why we use them.”
~ Alan Meyer, President & CEO, 1st MidAmerica CU
When it comes to safeguarding your auto loan portfolio, some lenders find themselves choosing between a simple blanket policy or a comprehensive, tracked CPI program. On the surface, blanket coverage can seem like the easier option — a straightforward expense for a layer of protection.
However, what seems easy often hides significant risks and missed opportunities.
A tracked CPI program offers far more than just insurance; it provides a wealth of strategic advantages that strengthen your institution's bottom line, enhance borrower equity, and even offer predictive insights into portfolio health.
Let's explore six key advantages you might be overlooking.
Fortify Your Financial Position
A tracked program provides multiple layers of direct, measurable financial protection that non-tracked programs simply can't match.
1. Reduce Uninsured Exposure: More than 15.4% of U.S. drivers are uninsured, and a non-tracked program can allow that number to grow unchecked within your portfolio. A tracked program actively encourages non-compliant borrowers to obtain their own coverage, directly reducing your exposure to uninsured losses.
2. Secure Your Claim Payments: Without tracking, there is nothing to ensure your institution is named as the lienholder and loss payee on a borrower's policy. If a vehicle is totaled, the insurance payment could go directly to the borrower, who may have no incentive to pay off their loan. Tracking lienholder status is essential to securing your claim dollars.
3. Lower Loan Charge-Offs: The claims benefits from a tracked CPI program have a dramatic impact on your bottom line. Our data shows that tracked programs can reduce loan charge-offs by as much as one-third. Lenders who move away from tracking often see a corresponding rise in losses.
"Over the years State National has really helped with our losses. When I was VP of collections, I tracked the numbers and said, ‘Okay, here's how much we saved from being with State National.' These are numbers you can show to your board of directors to show them the true value. Numbers don't lie, and these are substantial dollar amounts that have been really significant."
~ Katie Patsche, COO, Heartland Credit Union
Enhance Borrower Equity and Fairness
Protecting your portfolio shouldn't come at the expense of your compliant borrowers. Tracking allows for a more equitable and supportive approach.
Gain a Predictive Edge
Perhaps the most overlooked benefit of insurance tracking is its power as a proactive risk management tool.
6. Identify Future Delinquencies Sooner: Decades of experience have shown that when a borrower drops their auto insurance, it is a powerful early warning sign of financial distress and potential loan delinquency.
Our tracked program's extensive reporting gives your collections department a crucial heads-up, allowing them to proactively engage with the borrower to find a solution. This early action reduces repossessions and minimizes losses on depreciating collateral.
Choosing your portfolio protection is more than an operational decision — it's a strategic one. While blanket policies offer a simple layer of coverage, a tracked program turns your portfolio protection solution into a dynamic asset that actively reduces risk, promotes fairness, and provides invaluable data to keep your institution ahead of the curve.
“In general, cost is the number one factor driving financial institutions to switch from blanket insurance to CPI. In addition to either passing costs through to borrowers or absorbing them, many lenders find they must raise rates regardless of claims, making them less competitive in the long run.”
~ Loren Shelton, Program Analyst, State National