Member Retention Is Your Real Collateral

During uncertain financial times, many people look for any means necessary to reduce their spending, including skipping bills. As a result, auto insurance premiums are one of the first financial commitments that people allow to slip. The Insurance Research Council estimates that as the national unemployment rate increases, so will the number of drivers without auto insurance. Unfortunately, if an uninsured borrower gets into an accident, the credit union's position is compromised, and that is a risk that credit unions do not want to take.

When the economy is stable, Collateral Protection Insurance (CPI) is a 'just-in-case' mechanism meant to protect credit unions from paying for damages on a repossessed car. In unstable economic times, CPI becomes a service for credit union members who are struggling financially, and how this service is delivered determines whether members borrow from your credit union again when they are more financially secure.

Providing Erroneous CPI Can Damage Member Relationships

It is important for credit unions to recognize that their members are financial consumers first and credit union members second. Reports within the CPI industry show that 60% of the CPI policies placed on member loans occur when there has been no actual lapse in member insurance coverage! The difficult and time consuming process of getting the premium and related interest backed off the loan can make your member angry enough to leave your credit union.

Support Insurance Systems (SIS) understands the connection between quality and member retention. In today's supply and demand financial services environment where true loyalty to a single financial institution may be a thing of the past, it is essential that force-placed dollars on loans be as accurate as possible. That's why SIS consistently focuses on and achieves high levels of sustained accuracy in tracking performance and policy placement.

CPI Done Right Can Reduce Charge-Offs And Preserve Member Retention!

Traditional CPI programs place an annual CPI premium that hits your already struggling member hard and makes it nearly impossible for them to recover. Continuum™ with The Premium Alternative™ reduces the impact of CPI to your members. The Premium Alternative™ is a true monthly premium and the key to a softer approach. The premiums are added to the monthly outstanding balance (MOB), but only for the months that are needed. Therefore as the balance decreases, so does the monthly premium. Continuum™ with The Premium Alternative™ makes it easier for your members to recover, which keeps your members in their vehicles and their loans on your books!

A Little Known Face

"Up to 80% of CPI policies will cancel within 6 months, so why place an annual premium policy when 6 months or less will do?" says Rhonda Sheets, President of SIS. "Placing invalid policies on loans that include costly annual premiums and related interest charges is unnecessary, unwise, and a significant compromise to member loyalty."