Collateral Protection Insurance (CPI) is insurance used by lienholders to protect themselves from financial loss. CPI is also known as force-placed insurance because this type of insurance is not sold to a customer, however, it can be placed on a vehicle when the borrower does not have physical damage (comprehensive and collision) coverage.
In the automotive industry, it’s crucial lenders, dealers and finance companies effectively track their customers’ auto insurance status. This allows lenders to stay on top of every update and keep their company safe from potential liability or monetary loss.
Nearly every auto insurance tracking company claims to help you save money, but Verifacto stands apart from the competition with its unique technology to put you, the lender, in control so you’re never in the dark when it comes to your customers’ insurance status.
Manually sending out payment reminders to customers is a tedious and tiresome ordeal. Not only does it take up precious time, but if a payment reminder gets lost in the mail or misplaced by a customer, this puts a delay in your cash flow.
To reduce payment risks and save your company a lot of time, Verifacto provides automated payment reminders for lenders nationwide. This innovative technology results in effective accelerated payment collection for lenders and leaves borrowers satisfied with an easy-to-use payment process.
If an auto lender is not using insurance tracking with their customers, the company is taking a high and unnecessary risk which results in monetary loss from their customers that are not properly insured. When it comes to insurance tracking, lenders want to make sure they’re asking the right questions so they can get a better understanding of how to mitigate insurance and risk exposure to make a positive impact on their business.
Auto dealers, lenders, and finance companies need to effectively track their customers’ auto insurance status so they can stay on top of every update and keep their company safe from any unexpected loss.
Accidents from uninsured vehicles happen all the time and if a customer is involved, and the lender is unaware of their insurance status, the company can take a hit leading to loss of revenue across the board.
Verifacto’s insurance tracking allows lenders to efficiently monitor and minimize insurance risks. The platform also provides better communication with customers and explains how to fix their insurance deficiency. To ensure an increase in customers that drive with proper insurance coverage, the system automatically follows up with each customer until the risk has been resolved.
If you’re an auto lender considering adopting insurance tracking, here are 5 important questions to help you make the right decision.
In today’s market, auto lenders are battling to maintain profitability and growth. Finance companies, banks and other lending groups are all competing for consumer auto loans. In this economic climate, it is imperative that lenders protect their bottom line by minimizing losses.
One initiative that lenders can take to help minimize losses and protect their profitability is to purchase collateral protection insurance (CPI) to help control their risk. This shields lenders in cases where the consumer isn’t current on their insurance and is either in an accident or the vehicle is returned from the borrower with damages. In addition to controlling the risk, a sound CPI program will increase profitability through an entirely new profit center, as well as help to retain existing customers. It’s a win-win-win for lenders.
How Does CPI Benefit Lenders?
Most CPI programs are administered by a third party – the CPI administrator tracks all borrowers in the lender’s auto loan portfolio to make sure that each loan has the necessary coverage in place. If the borrower has not purchased coverage for his car, or has allowed it to lapse, the administrator sends out a series of notifications informing him that he must correct the coverage issue immediately. If the borrower still does not comply, the lender has the option of placing CPI coverage on the loan and adding the premium to the loan balance.
A number of auto lenders today “self-insure” their exposure to uninsured collateral by simply absorbing the losses. But many auto lenders have no idea exactly how much exposure they are actually carrying, because they aren’t identifying and tracking those borrowers who have not maintained coverage on their vehicles and therefore can’t accurately budget for it.
A CPI program ends up being the most efficient way to control the risk of uninsured collateral since only those borrowers who have not maintained the required coverage on their cars end up paying for it. When deciding to implement a CPI program, it’s important that lenders select an experienced company with the technological and customer service capabilities to accurately identify those borrowers who have allowed their coverage to lapse, or have policies with other deficiencies such deductibles that are too high. This is where Verifacto comes in.
How Does Verifacto Help Lenders Administer Collateral Protection Insurance?
Verifacto’s CPI solution module is designed with advanced compliance and tracking technology that lets you, as a lender, see and control your own portfolio insurance risk. Since auto insurance costs have been skyrocketing lately, lenders may be experiencing increased policy cancellations and more uninsured drivers on the road. Verifacto’s CPI solution can control that risk, increase a lender’s profitability and help retain customers.
Verifacto provides auto lenders with a Collateral Insurance Program that allows the lender to reduce their risk to a minimum with a cost-effective and technology based solution. Choosing Verifacto allows auto lenders to:
- Decrease losses caused by excluded perils
- Decrease uninsured portfolio losses by controlling your risk
- Go beyond simply identifying customer coverage issues – now you can solve those issues
- Increase and track compliance of the CPI providers
- Increase automation and efficiency
- Increase Profitability
Contact Verifacto today at firstname.lastname@example.org to receive a no obligation demo and see the advantages for yourself. Our demo will provide a deeper look into the best ways to utilize our Collateral Insurance Program as well as an assortment of other solutions to keep you better protected.
Lienholders in the automotive space, including car dealerships and financial institutions, have a wealth of data to keep track of in the course of their day-to-day business. As business has moved to a more data-centric focus, with more and more companies recognizing the value and importance of data in all areas of their business, the fact remains that many companies are using outdated tools to keep track of their data. Surveys suggest that one in five businesses utilize spreadsheet programs, such as Microsoft Excel as the main tool to record and monitor data.
A study conducted by Forrester Consulting confirmed that spreadsheets remain the dominant medium for business-critical tasks. Almost a third of respondents noted that their organizations use more than 10,000 spreadsheets on a regular basis and 88% reported using more than 100 complex and customized spreadsheets to support their critical business processes.
While spreadsheets have proven to be a valuable resource for many different parts of a company’s day-to-day operations, they are not perfect. Human error is a very real occurrence. In fact, research has shown that nearly nine out of ten spreadsheets have errors that affect their results. Every spreadsheet has the potential to hide inherent risk – and there are many. Formulas may not be repopulating correctly, coworkers could be using different versions of a saved spreadsheet, and information could be hidden behind formatting. And, while flexible and convenient, using manually driven spreadsheet-enabled processes can lead to errors, either accidental or intentional.
When dealing with high risks involve issues surrounding payments and insurance, it’s vital to maintain accurate data, and a more intuitive, agile insurance tracking service may be the answer.
Verifacto’s mission is to develop products to mitigate and reduce lienholders’ risks. We recognize how tedious, time-consuming and labor-intensive the process of tracking, verifying and communicating coverage information can be and, of course, we know that since the process involves manual labor, there is a high probability of potential errors.
Our insurance tracking service is a fully-customizable solution that empowers businesses to update and organize their insurance tracking methods operate with fewer staff, while allowing them to accurately and easily track their assets and reduce potential losses. The Verifacto On-line Management, Tracking, Verification and Communication system provides your employees the tools and empowers them to work effectively, improve your company’s operational efficiency and materially reduces your company’s risk of loss.
Our insurance tracking service is simple and intuitive, delivering an exceptional user experience. With a passion for finding simple solutions for complex problems using innovative technology, you can be assured that you have access to the most accurate and complete data available. Our platform is fully customizable, giving you the power to create a solution that best meets your organization’s unique needs.
If you are hesitant to move from spreadsheets to a cloud-based software platform like ours, fear not. Our software platform is hosted on the most robust, reliable and secure servers in the cloud throughout the U.S. And, in addition to saving staff time and expenditure, with our platform, there’s no need for expensive hardware and IT personnel. With new releases and updates, your configurations are preserved and seamlessly updated.
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While Excel is a powerful and invaluable tool, just one badly managed spreadsheet can open a business to risks that have the potential to singlehandedly cause irreparable financial and reputational damage. Don’t leave your business open to human error, trust an insurance tracking service to ensure accurate insurance management, tracking, verification, and communication. Request a demo and see how our secure, intuitive, automated and cost-efficient communication system can positively impact your business.
Let’s face it: snail mail is an ineffective means of communication – especially when it comes to payment reminders. No wonder so many businesses are turning to payment reminders and bill alerts to encourage customers to settle on time. While some businesses might be skeptical of switching to an automated payment system it is easily the better option.
Why You Should Choose Email or Text Notifications as Payment Reminders
Send a payment reminder by letter and it may be a few days before your customer sees it (it’s called snail mail for a reason). Additionally, the mail can take three days or more for a letter to arrive at its destination. Also, that mail can easily be lost or stolen.
Email and text notification with payment reminders, on the other hand, are delivered immediately. In terms of speed, electronic communications by text or email wins hands down.
When sending letters, you must cover the cost of the paper, envelopes, ink and postage. If you want to use recorded or express delivery, or enclose a copy of the invoice, that’s an additional cost.
Send out payment reminders by email, however, and the cost is far, far less!
Although both letter and email reminders can be automated, emails are arguably much simpler and faster to process. What’s more, they can easily be scheduled to arrive on a fixed number of days before or after the due date and at a time when your customers are most likely to check their inbox.
But it’s not just businesses that appreciate the convenience of emails. So do most customers. They can open emails at home or on the move and can manage to reference these communications easier than filing a letter away somewhere in their house!
While it’s true that emails offer a faster delivery method, some people feel that they don’t have the same sense of professionalism or urgency that letters do. In the minds of many—arguably older—customers, a letter carries more “significance” than an email, probably because we receive far fewer letters these days.
It may also be the case that, in some countries, companies threatening legal action over unpaid debts may be obligated to correspond via letter rather than email.
Whether sending a reminder by email or letter, you can underline the seriousness of the situation by using a more formal tone and style. You can also explain the consequences of late payment.
Even so, overcoming the perception of some customers that emails aren’t as urgent may be difficult. So, for final reminders especially, letters still probably beat emails.
5. Inbox overload
Send an email to your customer and it’s likely to be one of tens or more that they receive that day. Many of us suffer from inbox overload, so the chances of an email being overlooked or deleted are perhaps greater than those of a letter.
Mind you, one could argue that individuals who have debts piling up are likely to be stuffing unopened mail at the back of a drawer.
To ensure your emails are not ignored, send it at the right time of day, make your company name visible and the subject line clear (e.g. “Energy bill overdue” or “Automatic bill payment due on [date]”)
In addition, make sure your emails are mobile responsive so that they can be read easily on a mobile device.
Some of your customers may not have access to email, particularly if they are elderly, deprived, poorly educated, disabled or live in a rural location. Don’t underestimate the number of people that fall into these categories.
7. Delivery rates
Delivery can’t always be guaranteed with either email or letters. To begin with, you need the correct address. But even if you do have the correct address, there’s a possibility that the reminder may still go astray.
Emails can end up in the customer’s spam folder if the Internet Service Provider (ISP) or even the customer labels it as junk mail. Letters can get lost between your offices and the customer’s home, and less-than-honest customers can deny ever receiving the letter in the first place.
Working with a premium email reminder service provider goes a long way to getting over the spam problem. These companies can work within an ISP’s set of complex spam rules and use your company’s domain, which slashes your ‘designated as spam’ risk.
8. Measurable results
One big advantage of digital communication is that you can check at any time whether the email has been bounced, opened or clicked on. There’s no need to wait for a payment that doesn’t come in.
And if the email isn’t delivered or opened, you can simply call or text the customer instead (this follow up through a different channel can be done automatically).
With letters, however, it’s a case of waiting for a phone call or a payment from your customers, which means it could take a few days before you realize your letter has been lost, mislaid or ignored.
9. Immediate response
If you want your customers to respond quickly, email is your best bet. Automated email reminders can include a pay link, and since most smartphones have banking apps, all your customer has to do is click on the link, view the invoice and make the payment.
A letter, however, is likely to be placed on a “things to do later” pile. And if you haven’t enclosed the invoice, you could be giving your customer another excuse for not paying.
Emails are undoubtedly “greener” than letters. If your company is serious about reducing paper consumption, email is a no-brainer.
So, which is the more effective payment reminder: letter or email?Having taken you through the pros and cons, I think it’s safe to say that email has a distinct advantage over letters in terms of cost, speed and convenience. What’s more, those that include a pay link enable customers to pay immediately. That advantage alone makes it a winner in my mind.
Survey after survey tells us that today’s consumers want fast and easy access to companies. Emails, therefore, are just the ticket. But those same surveys also tell us that consumers want options, so don’t rule out letters altogether. They still have their place.
Whichever version you choose, make sure you have a clear overview of your customer base, consider individual communication and payment preferences, and offer a range of options. That will please your customers and your finance director.
How Insurance Tracking Benefits Auto Finance Companies
Lenders have thousands of dollars tied up in their auto portfolios. These banks and auto finance companies need insurance tracking that will protect their assets and mitigate any risk of loss. Insurance tracking is essential to providing lenders with security, compliance, and ultimately peace of mind. Verifacto’s insurance tracking services give financial institutions an edge in managing auto insurance.
Verifacto’s Insurance Tracking Services Provide Peace of Mind to Auto Finance Companies
Verifacto offers insurance tracking services to financial institutions and lenders looking to reduce administrative costs and alleviate risk. Insurance tracking service providers are an optional alternative for any size financial institution looking to out-source the process of tracking insurance policies on their automotive loans.
Verifacto is different from other insurance tracking companies because we communicate directly through text and email to notify car owners if their insurance has expired or is under insured. The timeliness of these communications will help to mitigate risk and prevent loss to financial institutions.
Verifacto’s Insurance Tracking services provides a compliant and secure solution to confirming all of your institutions auto collateral has sufficient insurance coverage. With a borrower-focused approach, our Insurance Tracking platform provides best-in-class customer service to you and your borrowers. We understand that as your partner, we are a reflection of your institution, and that is why we strive to uphold the highest level of customer satisfaction.
From tracking insurance and following up on cancellations, to sending out compliant SMS Text and Email communications, our insurance tracking services alleviate risk and protect your institution from unnecessary losses.
Benefits of Verifacto Insurance Tracking Services:
- Track insurance coverages on your existing loans
- Verify insurance coverage on new loans
- Save time and money on staff expenditures
- Mitigate insurance losses cost effectively
- Document management for insurance notices
- Detail insurance history for recovery and compliance
- Automate customer communications to resolve insurance issues
- The industry’s most reliable and secure technology
- Gain more control and visibility into your portfolio
- Quickly pull internal reports with one-click
- Store customer communications for easy reference
- Increase overall profitability and portfolio value
If you’re interested in learning more about our services request a demo today. Our demo will provide insight into how best you can utilize our insurance tracking services, as well as an assortment of other solutions to maximize compliance.
Your subprime borrower just totaled their vehicle. They still owe over $4,000. Unknown to you, they didn’t have any valid insurance or their insurance has lapsed.
You do your best to keep up with insurance tracking. However, the process is time-consuming and labor-intensive. You don’t have the time to verify between third parties. If you track insurance manually you run the risk of human errors as well. Between calculations that end up falling through the cracks and the inability to keep up with the amount of paperwork it takes to verify insurance, you could be left in a serious lurch.
Now, because of all the things that go wrong, you’re stuck with a substantial bill. Keeping up with insurance can be an exhausting process, but necessary to make sure you don’t end up having to spend thousands of dollars to cover a loss. Fortunately, Verifacto is has found a solution to streamline the process to benefit car dealerships, insurance companies, and drivers.
In the United States, many drivers on the road do not have auto insurance. They may come into your dealership or financial lending institution with insurance, but then let it lapse due to difficulties paying or because they never intended to carry insurance on the vehicle in the first place. In the last 5 years auto insurance prices have increased rapidly to a point where drivers with bad credit and one ticket will not be able to afford auto insurance coverage. In five U.S. states, 20% or more of drivers have no insurance; countrywide that rate is even higher. Read more