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.Leveraging Partnerships for Better Outcomes
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.
Worried the CPI on a borrower’s loan might increase the likelihood of default? Good news – it’s actually an opportunity to protect your member.
The Hidden Dangers of Abandoning CPI Over the past 50+ years we have seen how unintended consequences often surprise lenders who choose to switch their portfolio protection solution from CPI to a blanket policy. For many credit unions, it seems like a good option — until later down the road when both their number of uninsured borrowers AND their premiums keep rising. Without the monitoring of the loan portfolio that comes with CPI, it has been shown time and again that the number of uninsured borrowers will increase and the credit union’s losses will grow larger. To show how this plays out in a real-world example, one of our current clients* recently worked with us to run a test on their portfolio after they decided to move to blanket coverage, by continuing to track their borrowers' insurance status (to ensure their privacy, we'll call them "Best Lending Institution").
