Protecting the assets in a mortgage servicer’s portfolio through verification of adequate fire, flood and wind insurance is a requirement of almost all investors and certainly of the federal regulators. It is a complex process to consistently verify that the applicable insurance is in place on the dwelling, paid timely and confirm that the insurance carrier meets all the servicer’s requirements. That’s why most mortgage servicers outsource the responsibility to an insurance tracking provider (“provider”) who has the infrastructure and technology to perform the work more effectively.

Sometimes, the homeowner doesn’t obtain insurance to protect their dwelling. In those cases, lender-placed insurance (LPI) comes into play – first through notifications to the homeowner and then through placement of a policy if evidence of traditional insurance cannot be verified.

The goal of any top-tier provider should be to make LPI the last option. Placing LPI without thoroughly validating whether traditional insurance exists, educating customers about their options and attempting to place them in a traditional product that offers expanded coverage is a disservice to the customer, the servicer and the investor.

For servicers engaging in their annual vendor due diligence process, or reviewing providers as part of a Request for Proposal (RFP), there are indicators that help determine how effective a provider can be in moving beyond the stereotypical insurance tracker and issuer of LPI.

Extensive breadth and quality of insurance products

Top providers own their insurance paper, rather than relying on an outside insurance carrier to provide the product. By owning their paper, the provider can easily create products to meet the evolving needs of the servicer. This nimbleness is very beneficial to meet the demands of customer-focused campaigns and meet the changing requirements of regulators. The LPI insurance products should be admitted in all states and the District of Columbia, which requires the carrier to file its rates with each state’s department of insurance and also receive approval before making any rate changes. By doing business with an admitted insurance carrier, the servicer meets the regulatory and investor guidelines in this area and saves their customers the surplus lines tax and stamping fee that are required when purchasing a policy from a non-admitted/surplus lines carrier.

When the provider has a broad suite of insurance products, they can offer customized multi-product, multi-tier solutions that extend well beyond LPI. This allows the servicer to offer broad product solutions to their customers, and specifically be able to offer real alternatives to LPI. Such providers actively reach out to customers in the LPI notification cycle with this option. They also refer customers to an insurance agent for a quote when they are having difficulties finding insurance through less robust carriers. This approach is a real benefit that offers cost-savings and a better experience to the customer and their relationship with the servicer.

Proactive approach to insurance tracking

Comprehensive insurance tracking capabilities should be delivered through a dynamic tracking platform that seamlessly integrates with any mortgage servicing system. The right tracking system, processes and staff allow for increased service efficiencies, lower false placements of insurance, enhanced data analytics and a better customer experience. The provider’s tracking system should include automated business rules that focus human intervention on true exceptions and high-levels of automated data exchange with insurance carriers to assist in updating mortgage insurance records electronically.

The tracking solution should be integrated within all aspects of the provider’s operations, so that customer service, training, claims, quality assurance and operations are all working hand-in-hand to develop and deliver solutions, understand the voice of the customer and proactively address potential gaps and opportunities. The best providers will employ structured programs and processes that create a culture where their team acts as an extension of the servicer’s operations, ensuring all quality and compliance standards are met. Partnered engagement is an important aspect of success in the provider/servicer relationship. The needs of the customer and the servicer are most effectively met when the provider is a partner, rather than merely a vendor. This means commitment from the provider to go above and beyond what is spelled out in a contract to consistently deliver solutions that protect the servicer’s brand and secure the relationships with their customers.

The provider should deliver compliance solutions that mitigate the servicer’s risk in the ever-evolving regulatory environment. Their approach should include a disciplined methodology of interpreting regulatory guidelines, identifying impact to the servicer and designing solutions. To meet the requirements of the Consumer Financial Protection Bureau (CFPB), the provider must have a methodical complaint tracking process where complaint resolution is linked to continuous process improvement.

Quality assurance, provided by an independent and centralized team, should be in place to ensure that regulatory compliance requirements are met, along with the servicer’s requirements. Identified errors should be mined for root cause to improve the provider’s approach and drive continuous improvement. Commitment to a zero tolerance quality focus should be part of the provider’s standard partnership with the servicer. Providers should have ISO 9001 certification, which specifies standards for a quality management system that demonstrates the consistent ability to provide products and services that meet customer and regulatory requirements. This certification provides the servicer with assurance of the provider’s ability to consistently perform, continually improve and reliably deliver customer satisfaction. In addition, zero findings as part of Reg AB audits will assure the servicer that the provider has tight controls to protect their funds.

Customer-centric service

Providers will tout their programs and ability to generate a strong customer experience as best-in-class, especially within their call center. The true measure of a program is to benchmark it against others through external, third-party audits.

There are several third-party audit and certification programs for validating the effectiveness of the call center which base provider certification on customer surveys and/or objective and quantitative data. One leading certification program is BenchmarkPortal’s “Center of Excellence Award.” Call centers are evaluated on 21 metrics regarding their ability to exceed rigorous statistical standards in comparison to their industry peers. Only those call centers that demonstrate superior performance on both cost-related and quality-related metrics earn the award. This certification represents one of the most prestigious awards in the service and support industry, as it analyzes several thousand call centers against the world’s largest database of call center metrics.

A true focus on first-call resolution will offer strong benefits to the servicer. To mitigate false lender placement, proactive calls to the customer’s carrier or agent should be made to verify traditional insurance information while the customer is on the line. This avoids repeat calls by the customer and their agent, leading to a direct lift in customer satisfaction.

To further ensure that customer priorities are met, the provider should develop strict service level agreements with the servicer that include non-adherence penalties. This ensures that the provider is serious about delivering service that meets the servicer’s expectation.

Knowing these areas to look for will help servicers choose the best provider that meets their needs and truly cares for the needs of their customers.

About National General Lender Services

Over 40 years of tracking and lender-placed insurance experience, coupled with our full-service property and casualty insurance capabilities, make National General the best choice for mortgage and auto lenders seeking a superb, full-service insurance partner.

National General deploys the complete breadth of our expertise, compliance focus, service and products to go above and beyond other insurance providers to provide customers additional choices in lieu of lender-placed insurance.

National General has earned the Call Center of Excellence certification from BenchmarkPortal for 10 consecutive years and the ISO 9001:2008 certification for 7 consecutive years. To learn more about how we can provide you with a compliant lender-placed insurance program backed with consistent service delivery and award-winning customer service, call 800.225.8178 or visit us at NationalGeneral.com/LenderServices.