Making the Switch from Tracking Insurance to a Blanket Policy
Many of our current customers that have elected to implement blanket insurance to mitigate the risk of uninsured or under-insured collateralized loans did so from some type of insurance tracking program. Some were tracking internally, and some were outsourcing the function to a third party. Two questions they all had in common as they considered moving to a blanket program were, “How do we make this switch?” and “What kind of work will be involved on our end?”
If your institution has an insurance tracking program that’s been in place for a long time, it’s all you know, and it can be overwhelming to think about a different model–but you might be missing out on something that could really improve efficiency and your bottom line, not to mention customer satisfaction. Often the person who implemented the program is no longer with the company or they have not thoroughly investigated alternatives. There has never been a better time to understand all the types of collateral protection insurance approaches to see if blanket coverage could be a good fit.
First of all, let’s define the premise of blanket insurance, regardless of the type of collateral (mortgage loans, consumer loans, equipment loans) it covers:
Blanket policies ELIMINATE insurance tracking by anyone–whether it’s your staff doing it or the company you’re paying to do it (all of which are subject to human error). Your exposure is covered without having to force-place the insurance in the case of a lapse in primary coverage.
Once you verify that insurance is in place when you originate a covered loan, you have no further obligation regarding a borrower maintaining insurance on that loan. In the case of an uninsured loss, your loan balance is covered. (Subject to policy coverage.)
Since neither you nor your third-party company is force-placing insurance, there is no back and forth with insurance companies and borrowers that lead to force-placing policies in error and needless administrative effort–you’re just covered!
If your institution is tracking internally, transitioning to blanket coverage is easy, almost like turning on a light switch! Track insurance one day and don’t the next once a blanket policy is incepted.
Read: How Well Do You Know Your Collateral Portfolio Insurance?
For those who outsource the insurance tracking function, moving to a blanket policy could require a little more attention if you’re in a long-term contract. Many outsourced tracking companies will automatically renew your contract anywhere from 90 days to 6 months before expiration, so it’s essential to know the terms of your agreement and start shopping early.
Read: Force-placed CPI Insurance – Is There a Better Way?
At Unitas, your dedicated agent will take the time to evaluate your current program and see if the benefits of a blanket insurance program make sense. Our customers who switched to blanket insurance from a tracking program tell us they would never go back to the way they did before. We have Blanket VSI programs available for consumer loans, Blanket Mortgage for real estate loans, and Blanket Equipment for commercial equipment loans.
