Mitigating risks and reducing losses has been a focus for all mortgage lenders and servicers in the current environment of the U.S. mortgage industry. Reputational, regulatory and financial risk mitigation has been the key agenda for most of them over the last few years and several initiatives have been undertaken strategically to enhance their existing risk management programs.
Among several methods of reducing loan loss, enforcing Lender Placed Insurance has become an integral part of the risk management program for any lender/servicer. Any uninsured collateral or property not only increase portfolio risk but can also prove to be a very costly affair for the lender/ servicer and borrower in case of default. Hence constant vigilance of the loan portfolio becomes imperative to ensure that the correct insurance coverage is always in force throughout the life of the loan. It’s not just about making sure that insurance coverage has been taken once, but the difficult part may be to monitor that renewals and appropriate coverage is in place during the life of the loan. Most of the mortgage lenders and servicers have now outsourced their insurance tracking needs to lender placed insurance firms who provide insurance tracking services and appropriate insurance coverage.
Lender Placed Insurance firms track loan portfolios of Auto Insurance, Home Insurance, Hazard, Flood, Wind, Earthquake, Mobile Homes and other insurance mortgaged on the property.
These Lender Paced insurance firms typically assign a major chunk of their in-house resources to manage the lender’s portfolio of loans, by obtaining the documentation of all insurance on the property. They need to scan through millions of loan documents to validate if the insurance information is current, apart from also maintaining a dedicated calling team focused on making calls to insurance carriers and borrowers for updating the insurance information. This is particularly important for insurance covers on a property, as these typically need to be renewed every year.
It is indeed tedious, time-consuming and costly for these Lender Placed Insurance firms to do this in-house. Struggling with profitability issues in their business, many Lender Placed insurance firms are now partnering with third party service providers like SLK Global Solutions to manage the entire data entry, verification as well as the contact center needs for their tracking operations.
Some benefits that Lender Placed Insurance firms have achieved with SLK Global:
- Reduced cost of tracking operations by 25% to 30%
- Improved turn time and accuracy in insurance tracking
- Free up resources from tracking to focus on core insurance function
And here’s what one Leading Lender Placed Insurance firm had to say about the partnership with SLK Global
“Your team has been a vital part of our success in meeting our outbound volumes which allowed us to turn our attention to our inbound needs. We are appreciative of your flexibility in meeting our volumes. Your focus and attention to detail have been very much appreciated as well”