5 Factors Contributing to Increased Risk for Auto Lenders

Rising Auto Delinquencies, Higher Charge-Off Risk, and What You Can Do to Protect Your Loan Portfolio

Celebrating women’s achievements, forging women’s empowerment, and building workplaces where women thrive.

State National's Retreat Where Female Finance Executives Go to Network and Learn A 2021 report from CUNA indicated that 51% of CEOs at credit unions and 33% of credit union board members are female. Many organizations speak at length about the value of empowering and providing opportunities to women — yet this recognition must be met with action. For example, Kim Sponem, CEO of Summit Credit Union, took action by starting The Red Shoes initiative. Filene Research Institute actively creates research reports about women in credit union leadership. These are just two of many examples across the credit union industry. Missions like these are an important part of transforming the narrative of women and finance. State National Companies also recognizes the unique leadership traits and skillsets that female leaders bring to the financial services industry. To celebrate those traits and provide women leaders from across the country the opportunity to build relationships with their peers, we created our own initiative — an annual event called the Female Executive Networking (FEN) Retreat. Why a Retreat Specifically for Female Executives? The goal of this annual retreat is multifold: Provide valuable, meaningful, and actionable education, information, and resources to senior credit unions and financial institutions executives that they can use to move their organizations forward. Create a forum for financial institution leaders from across the country to share best practices regarding leadership, retention, business growth, and operational excellence. Provide a rich and rewarding experience that organically allows connections and relationships to grow. Empower and inspire attendees to return to their financial institutions re-energized, with new ideas for accelerating the growth of their organizations. With these goals in mind, we launched our first FEN retreat in early 2020. And, oh, how critical it was for the female leaders who participated in this first event to achieve these goals — because at the time we didn’t realize were heading home to nearly two years of quarantine and isolation! A Most Welcome Return In 2021, after waiting 18 months from our launch date, we were more than eager to resume some sense of normalcy and held our second FEN Retreat. That year’s event featured Terri Trespicio, speaker, coach, and best-selling author of Unfollow Your Passion, as our keynote speaker and workshop leader. This year, our 2022 keynote workshop, titled How Macroeconomic Conditions Will Affect Your Financial Institution, Your Customers, and Your Household, was led by Marlena Lee, Ph.D., Global Head of Investment Solutions at Dimensional Fund Advisors, and Mary Ellen Krueger, Director, Wealth Management and Partner at Aspiriant. Not only are these FEN retreats educational, inspirational, and just plain fun, we at State National are also proud of being a part of the movement to empower even more women to lead in moving the credit union mission forward. After all, studies show that more female executives in a C-suite role can improve both customer orientation and financial performance. That’s a win-win-win — for credit unions, for their members, and for women in financial leadership. If you are interested in learning more about State National’s Female Executive Networking retreat, please contact your State National Client Executive or Regional Vice President. Comments from FEN attendees:

CPI expert and Sr. Client Executive Kathy St. Clair shares her insights on how to educate borrowers about CPI and what to say if a borrower has questions about a CPI certificate placed on their loan. In Part 1, Equipping Your Staff, she shared the value of informing borrowers proactively and the multitude of resources and support State National has available to assist you. If you do not know what CPI is, we recommend first reading What Is Collateral Protection Insurance (CPI)? Borrower Questions Covered in This Article Will I receive a refund once I show proof of insurance? I submitted my insurance, but have not received a refund Can I keep CPI as my only car insurance if I want to? How do I rectify my insurance status? Can this insurance be refunded? While you can redirect a borrower to State National at any time to be helped by one of our friendly, highly trained team members, we want to share the answers to some common questions a borrower may ask so you and your staff feel prepared to answer anything. Borrower Questions: "Will I receive a CPI refund once I show proof of insurance?" "If I go out and get insurance, can I be refunded for what I have paid for CPI so far?" "Will I still have to pay a premium on my loan each month once I show proof of insurance?" Once State National receives proof of insurance, a refund is quickly processed and sent back to your financial institution. If the borrower had adequate insurance for the time period in question, a full refund will be issued. There may be a charge for any verified lapses in coverage. How quickly we can issue a refund will depend on the agreed-upon process, such as ACH or manual check. The refund is then posted to the borrower’s loan. In many cases, this can be done through an automated process, eliminating any manual administration for your staff. Along with quickly processing a refund, we send a notice to the borrower to let them know that their refund was processed. "I submitted my insurance — why haven’t I received a refund?" or "Why am I still receiving notices?" This is where InsurTrak can once again come to your aid. If InsurTrak indicates that we have sent a borrower an impairment notice, you can let them know that we did receive their insurance but that the information they sent us was not complete. Through our tracking, we are making sure the borrower provides full-coverage insurance, both comprehensive and collision, with you listed as lienholder. Making the borrower aware of this can help them understand what additional information they need to submit for quick rectification. "Is CPI considered insurance? I may want to keep CPI because it is cheaper and more convenient than my previous insurance." "Can I keep CPI as my only car insurance if I want to?" Some of our CPI partners have shared that borrowers occasionally ask about keeping their CPI insurance instead of purchasing their own auto insurance. A borrower should understand that CPI is not an equal alternative to car insurance they can buy on their own. By educating a borrower on what CPI is, you can deter them from keeping CPI. CPI is meant to cover only the cost financed by you as a lender — it is intended to protect your loan portfolio, not the borrower. While CPI provides comprehensive and collision coverage on the automobile, it does not cover the driver. CPI will not assist a borrower in covering any damages to another individual’s property. Most states also require drivers to carry liability insurance in case an accident occurs and there is another party or property damage involved. Not realizing the specifics of their insurance, a borrower with CPI coverage will sometimes return to their lender after an accident or other loss and ask for a copy of the policy. You can let them know that even though the insurance policy is mainly there to protect the lender, and excludes damages outside of their vehicle, if they have damage to their own car they can file a claim so that they will remain in good standing on their loan. If they are not delinquent by more than 45 days, we will accept a claim directly from the borrower to repair that collateral and get them back in the driver’s seat. Please encourage your borrowers to get and maintain their own insurance. "How do I rectify my insurance status?" "Can this insurance be refunded?" The quickest way a borrower can have a CPI certificate removed is to submit proof of insurance to their lienholder — your financial institution — or directly to State National. We use a variety of methods to collect borrowers’ insurance on your behalf, and we make it as simple as possible for them to comply. Options for borrowers to provide evidence of insurance include calling into our Contact Center, or mailing, emailing, or faxing their Declarations Page to our Service Center. But text and email notifications are the fastest and most convenient way for a borrower to provide us with insurance. Each text and email notification we issue includes a link that takes the borrower directly to our self-serve portal, MyLoanInsurance.com, where they can easily upload a copy of their insurance information. This portal features notice-specific videos walking borrowers through their solutions for verification. Alternately, they can choose to reply to the text or email with an image of their coverage details. Borrowers also have the option to provide us with their insurance company name and policy number, and we'll reach out for verification on their behalf. Our goal with this multichannel approach is to make it as easy as possible for borrowers to submit their information in the way that is most convenient for them. Informed Staff Deliver a Better Borrower Experience All staff members who handle loans at your institution should have a basic understanding of what collateral protection is doing for you and how it works. We offer ongoing training and resources to your staff members. Your staff should also understand the premise and benefits behind the product — mainly, that it is there to protect your financial institution against uninsured losses. Here are some additional resources to build your knowledge about CPI: Short State National Animated Company Explainer Video What Is Collateral Protection Insurance (CPI)? Understanding the Differences Between CPI, Blanket, and Self-Insurance Remember, your financial institution’s dedicated Client Executive is here to help you with any of your CPI questions or needs! To read the first article in this SNC Spotlight series, visit Part 1, Equipping Your Staff

At State National, we recognize that collateral protection insurance (CPI) is not a term every borrower knows. Here, CPI expert and Sr. Client Executive Kathy St. Clair shares her insights on how to educate borrowers about CPI and what to say if a borrower has questions about a CPI certificate placed on their loan. If you do not know what CPI is, we recommend first reading What Is Collateral Protection Insurance (CPI)?