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.