We spoke with a manager in the asset management department of an East Coast credit union that is over 1B in assets, that recently switched from Collateral Protection Insurance (CPI) to Blanket Lenders Single Interest (LSI) coverage.
What challenge or problem were you experiencing prior to the purchase of LSI Coverage?
With our former CPI program, that included force place insurance and outsourced tracking, we had to add force place insurance premiums to loans with members who let their insurance lapse. We would then re-amortize the loan which increased the monthly loan payment. Members couldn’t afford the increase or didn’t realize it in time which increased our collections efforts. This lead to more cars being repossessed, higher delinquency, increased claims, claims not able to be filed with our carrier, increased charge offs, and our carrier charging us for a lot more than the loan was originally for. It created more busy work and member irritation than what we expected.
What was a benefit of switching to LSI?
Blanket insurance helped to streamline our loan servicing activity by eliminating the need to force place insurance or track insurance. We are able to make the claims when needed and it’s a lot easier for us to recover our losses. Members are no longer irritated by increased loan payments and calls and letters involved in our force placed cycle. The process has become less cumbersome.
How did the implementation process go?
Once we made the decision make the switch from CPI to LSI it was extremely easy to implement. We had to change our internal processes to match the new work flow of LSI. A lot of the busy work was eliminated which helps making the transition.
What was the outcome of going with LSI coverage?
Lenders Risk has been extremely helpful. Their LSI web platform that is used to report loans and make claims portal is very user friendly. Administratively we report the number of loans we make once a month and make any claims on the platform. We can run an audit on the claims at any time to see the payouts, adjustor notes, pictures of collateral, etc.
All together it has made life easier compared to our previous CPI program.
Did switching to LSI save money or help streamline your loan servicing workflow?
It’s too early to tell as far as cost savings as we made the switch 2 months ago. However I do foresee it cutting down a lot on man hours and eliminating time-consuming work. Overall I see it as being beneficial to everyone involved in loan servicing and loan operations.
Can you in a sentence or two compare “Life before you implemented LSI” and “Life after you implemented LSI”?
The insurance tracking was horrible by the other company we were using and there was a lot of miscommunication around various claim scenarios.
So far LSI has completely streamlined our whole process.
Did you have any qualms about trying the LSI product? Any regulatory concerns?
There are no regulatory concerns, and we discussed this program with our financial institution via references.
I invite anyone who has never been on a CPI program to try it out for a year, and then switch to LSI and call me about the positive difference it makes. I wish we had made the switch earlier and that we always had LSI in place. It’s a no brainer to make the switch.