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Expanded Use of AI-Based WRAP Delivers Results

Our WRAP (Web-Based Robotic Automated Processing) system is continuing to increase efficiencies. WRAP now proactively searches for new policy information from the top 5 auto insurance carriers in the country.

Expanded Use of AI-Based WRAP Delivers Results

Innovations in Robotics Processing Continues to Increase Efficiency

Robot Icon WRAP stands for Web-Based Robotic Automated Processing, and it has delivered incredible results for State National’s clients since it was introduced in 2019. In fact, you could say that our AI-based bot “team” has started a revolution in automated insurance verification.

Before WRAP, our insurance verification staff had to complete all web-based verifications manually, by logging in to insurance companies’ websites to find the data they needed. But with WRAP, thousands of borrower accounts can be automatically updated in our proprietary InsurTrak tracking and reporting system every day, without any human intervention whatsoever. This frees up our human staff members, leaving them even more readily available to help our clients maximize results from their CPI program.

These hard-working software bots are fast, precise, and tireless — reducing bottlenecks, accelerating speed, and increasing accuracy around the clock. They hate inefficiencies and love serving our clients 24/7!

Continual Improvement — WRAP Just Keeps Getting Better!

Since our initial investment in WRAP, we have continually expanded its use to search for, locate, and update our systems with up-to-the-minute, real-time insurance information.

We could see right away that WRAP was delivering remarkable results, so we quickly started looking for other places to put this powerful AI technology to work. Our research showed that 40% of all auto insurance policies canceled with the top 5 carriers (Allstate, Farmers, GEICO, Progressive, and State Farm) were subsequently renewed with one of the other five. We also noticed that many borrowers who canceled with other carriers ended up also choosing one of these 5 leading companies.

So, in September of 2020, we programmed our bots to proactively search for new policy information within these 5 large carriers whenever we are alerted that any borrower’s policy has been canceled. This happens 3 days before a notice would have been sent to a borrower with a canceled policy — which means many notices that previously would have gone out due to lack of available information now just never happen.

Little Bots, Big Results

A month after putting WRAP into action in this new way, we saw about a 30% drop in these types of notices sent to borrowers, and we expect this percentage to increase even further in the months ahead.

To learn more about how our bots work for you, watch the video.

Today, WRAP technology is doing more than ever to increase efficiencies at State National. In fact, we also added some new bots to the team that can search for insurance on new loans as they hit the State National system — searching the same 5 carriers they do for cancellations. Early results show the bots are very busy, looking up over 70,000 new loans each month with a 20% success rate. This results in a significant reduction in notices and related customer noise while the borrower is free to enjoy their new vehicle.

Our Investment in WRAP Pays off for Everyone

While it’s too early to accurately measure the overall long-term efficiency of putting insurance cancellations and new loans through WRAP, we have a foundational understanding of what our bots have been able to accomplish since we initially onboarded them as members of our State National team.

Comparing 20 accounts from 2017 to 2020, our team measured paper notices, inbound calls, and uploads to our web-based insurance portal, MyLoanInsurance.com. The results? Impressive! Paper notices went down 16.1% and inbound phone calls down 25%. That means we were able to increase total insurance verifications by 76% without adding personnel — resulting in less friction and less borrower noise.

Not only that, but we’ve also been able to utilize bots to streamline our claims processes with InstaClaim, which automatically settles some types of claims in 6 seconds or less. Claims paid in seconds, with ACH payment initiated overnight, instead of waiting days or weeks? There’s simply nothing else like it in our industry.

The past several years have seen leaps in technology that have helped us optimize how we receive and process data, and we continue to look for more opportunities to speed up and streamline our workflows. In fact, we’ve got another exciting technology launching very soon, and it promises to be a game-changer. Stay tuned!

State National’s commitment to innovation continues to translate to a positive client and borrower experience credit unions, banks, and finance companies just can’t get anywhere else.

David Crawford
David Crawford
David Crawford joined State National in 1998 and was instrumental in the creation and leadership of the centralized Service Operations for Lender Services, overseeing the continued growth of the Document Processing, Contact Center, Account Services, and Product Support groups. In 2018 he assumed the newly created role of Vice President of Strategy & Innovation, where he is the primary interface between IT and business users. He is responsible for researching, selecting, and implementing technology-based solutions to further enhance service delivery both internally and to State National’s clients.

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How Guaranteed Asset Protection (GAP) Mitigates the Risk Caused by Record High Auto Prices

Now, more than ever, it is critical to protect your auto loan portfolio with GAP Vehicle values have been at historic highs for the past year If you considered purchasing a vehicle this summer, you likely experienced some degree of sticker shock. New and used vehicle prices skyrocketed earlier in 2021 and are only now showing signs of a slight slowdown. How did we get to the point where Edmunds.com reported the average trade-in value of used vehicles was up 75.6% Year-Over-Year (YOY) in June? Simply stated, it all began last year. The manufacturing shutdowns of early 2020 left dealers with low inventory levels as shelter-in-place orders lifted and consumers, armed with stimulus funds and a desire to spend, went auto shopping in droves. The resulting low dealer inventories meant that would-be new car buyers were often forced to consider used vehicle options instead. Both new and used vehicles prices started rising in response to this unusual surge in demand. Despite seeing some stabilization of vehicle pricing in late 2020, things took a turn for the worse this year due to the global shortage of microchips. According to TrueCar, a Consumer Reports partner, there still remains an inadequate allocation of microchips for automobile manufacturers, exacerbating the inventory shortages that began in 2020. With inventory down as much as 50% in some areas, willing and able consumers are paying significantly more, with 20% of all new car purchases in May 2021 transacting at amounts above MSRP. This phenomenon has not been limited to new car purchases only — CNBC shared earlier this month that the average price of a used vehicle was up 21% YOY with a 10% increase from Q1 2021 to Q2 2021. What does the future hold for car values? July witnessed a slight reduction in the rate at which vehicle prices were increasing YOY. However, Carvana’s CEO, Ernie Garcia, warns that the cost of used cars will not normalize until manufacturers can produce inventory at pre-2020 levels. Supply chain challenges are likely to cause “some lasting” impact on used car prices, said Garcia on an August 6th CNBC’s Squawk Box. Black Book, in their 2021 Vehicle Depreciation Report, paints a slightly less optimistic picture, projecting “residual forecasts to return to pre-COVID 19 valuation levels in 3 years.” How will this valuation normalization impact lending portfolios? For a variety of reasons, many consumers found themselves paying in excess of MSRP or NADA for a vehicle over the past 18 months. This reality will not change overnight — it will take the automobile manufacturers replenishing and maintaining inventory levels on a consistent basis for prices to normalize. Whether that be in 2022, or in 3 years as predicted by Black Book, the reset of vehicle valuations has the potential to negatively impact your auto loan portfolio. Black Book’s annual vehicle depreciation rates averaged approximately 13% for each of the 9 years prior to 2020, when it dropped to just 2%. As vehicle valuations fall back in line with more historic depreciation models, loans already on the books as well as loans written through the remainder of 2021 will reflect inflated sales prices. In the event of a future theft or total loss at a time when vehicle values are back to pre-COVID-19 levels, primary carrier Actual Cash Value (ACV) settlements will result in unprecedented deficiency balances. And that is where GAP can help. Essential protection for you and your borrowers GAP has always been an important risk management tool. However, in today’s economy when vehicles are still selling above MSRP or NADA, it is especially important to lenders and borrowers alike for collateral to be protected against the changes in valuation expected over the next several years. Private Passenger Auto carriers settle total loss claims based on the ACV of the vehicle immediately prior to the loss, regardless of the original sales price. Inflated sales prices mean inflated loan balances on the date of loss, resulting in increased deficiency balances — the exact thing GAP is designed to protect. Not only will your potential charge-offs be reduced with GAP protecting your collateral, but your borrowers will also be better positioned to finance their replacement vehicle without the burden of having to satisfy a large deficiency balance on their original loan. How State National's GAP is different The State National GAP product provides unparalleled flexibility in the marketplace, primarily given our unique position as the direct sales force, underwriter, and program administrator. With options to protect amounts up to 150% of MSRP or NADA, you won’t need to worry about future deficiency balances resulting from today’s extraordinary market conditions. Additionally, you can rest easy knowing your pricing is not inflated to cover agent costs or, worse yet, that you will be part of an across-the-board rate adjustment because another lender’s program is not performing as expected. If you’re looking for the most efficient GAP claim submission process (it’s true — we really do not require any supporting documentation to initiate a GAP deficiency balance claim) and fastest claim settlement time (2 to 3 days, on average), isn’t it time you consider State National for your GAP Program? Contact us today to start protecting your consumer loan portfolio from the effects of inflated auto prices — driving a more positive experience for you and your borrowers.     Contact us today to receive more information about GAP from State National. Francine Gagliano, State National Director of Client Services 817-265-2000 x1247 or fgagliano@statenational.com

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State National Employees Crowdsource to Give Their Company Blog a Name When we launched our State National blog in 2020 as part of our company’s newly redesigned website, we had a few goals in mind: To provide valuable thought leadership and educational content that could be of help to our clients, potential clients, and anyone else in the industry whether they ever became a client or not To add even more transparency (one of our main core values) around the way we do business To help others in the industry get to know more about the thoughts and insights of some of our experienced subject matter experts and assist in building relationships To share more about the company culture we’re very proud of with those in the industry and with potential future employees And of course (speaking of transparency), because we are in business — to share benefits and features of our products and services and show credit unions, banks, and finance companies how we can serve them and help them be more profitable and successful The blog has been a great success so far, and we’ve received really positive feedback about the value people are receiving from our content — thank you!

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