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Managing Business Partnerships, Pandemic-Style

State National DVP, Joe McMullen, offers strategic insight into staying connected, providing support, and maintaining and growing business relationships post-pandemic.

My experience staying connected, providing support, and maintaining and growing my business relationships during the pandemic

Without exception, I always look forward to my annual journey to D.C. for the Governmental Affairs Conference (GAC), which offers the opportunity to network with friends, business partners, and coworkers. The atmosphere is traditionally upbeat and it’s a great way to see many of my favorite people, making the event a positive way to kick off each year. Little did I know that 2020’s GAC would be one of the last times I would have this kind of face-to-face interaction with people in my industry for quite a while.

Navigating Unexpected Change

In early January, my daughter told me about a terrible virus that was rapidly spreading. I discounted it somewhat, thinking the threat was probably exaggerated. In February, I began to pay more attention. As you know, soon after that the world changed dramatically, and now we find ourselves living in a very different time.

I have spent over twenty years building relationships with people in the financial services industry, and I most often meet with them in person. Safety regulations no longer make that possible. Given our current limitation on business travel, I wanted to research how business partnerships are navigating the current situation, and what plans they intend to initiate post-pandemic.

In search of reliable feedback, I reached out to two CEOs I know and trust, one from the Southeast and the other in the Northwest. My questions to both centered on how they are managing their business partnerships currently and what that process could look like once the pandemic threat has passed.

How Are Financial Institutions Transitioning?

Financial institutions have transitioned many employees to an at-home work environment over the past few months. This transition has been of paramount importance, not only to follow local guidelines but also to protect employees from unnecessary exposure to the virus. Both of the CEOs I spoke with shared that their company’s employees were very productive in a remote work environment, and they expected this work-from-home trend to continue even after the pandemic is over in some cases when feasible.

As someone who has routinely traveled at least 100 nights each year to meet face-to-face with my contacts in person, this definitely caught my attention. Both leaders’ opinions appeared consistent when it came to predicting this significant shift in where many employees will work. The question I wanted to understand is how doing business and maintaining business partner relationships will look for now, and in the future.

How Is State National Transitioning?

The same considerations apply to State National as well. By May, we had moved 98% of employees to a remote work environment, and this will continue for the time being. What does this mean from a business partnership perspective?

One leader advised me that he was limiting contact with vendors for the immediate future and that most of the key meetings he participates in have been made virtual. One of his projects was placed on hold to focus on what is most important, being able to reach and provide members with the technology needed for their financial service requirements. It appears the focus today is on “inward” investments, including more robust internet banking platforms, improved call centers, and anything designed to increase staff efficiencies and better serve members remotely.

Growing in Virtual Efficiency

In January, I had little understanding of just how rapidly the COVID-19 virus would change our world into what it has become today. Webex, Zoom, FaceTime, Teams, and other video communication platforms will play a key role in connecting financial institutions with their business partners. Fortunately, State National had already invested in this technology, because the need for efficient virtual communication will only increase as we make our way through this pandemic and beyond.

I miss seeing my business partners — waving to someone on a screen is just not the same as a handshake or happy hour in person. So I am encouraged when meetings are scheduled at restaurants and coffee shops, or when I am privileged with a quick round of golf. News of companies working on vaccines and therapeutics are generating hope that life might start looking more recognizable before too long, and I look forward to the day where we can all sit around a boardroom table again and have a good business discussion. In the meantime, I’m doing everything I can to stay connected and to maintain and grow the business relationships that are so important, and provide whatever help I can to business partners who need it.

Joe McMullen
Joe McMullen
Joe McMullen is a Division Vice President of Sales at State National Companies with more than 20 years of industry experience. He leads a team of sales professionals encompassing half the country. Joe’s main responsibility is to ensure division growth through strong business partnerships within the financial services industry. Joe has a B.A. degree in Political Science/Business Administration from Columbia College and currently resides in the Overland Park, Kansas area.

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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 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


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!

4 Things to Consider When Buying Your First Car

The biggest mistake many first-time car buyers make is that they don't understand the true cost of ownership before purchasing a vehicle. A car will always cost more in total than its sticker price, and many new buyers act on their emotions rather than logic. Acting on emotions when purchasing a vehicle can lead to poor decision-making, an expensive learning experience, and/or buyer’s remorse. This article explores several topics to help you better understand the purchase process and not financially overextend yourself.