Transitioning a portfolio of mortgage loans to a new insurance tracking and lender-placed insurance provider (“insurance partner”) can appear unsettling and create concerns for a servicer about adversely impacting its customers. Does this mean that servicers should go through the motions of evaluating providers just to stay where they are, even if better options are available? The short answer is “no.”
Making a transition to a new insurance partner can yield beneficial results for servicers, including:
1. Evaluating current processes, especially compliance and the customer experience,
2. Taking advantage of more efficient processes and better technology and
3. Performing fresh evaluations of their strategy regarding insurance-related interactions with borrowers.
Two primary concerns from servicers regarding a transition revolve around a) operational and reputational risk and b) limited internal resources. As a world-class supplier to mortgage servicers of insurance tracking and lender-placed insurance (“LPI"), National General Lender Services has the appropriate experience, methodology and controls to support a smooth transition to mitigate these concerns.
Concern: Changing insurance partners creates unnecessary operational risk and potential customer disruption. It’s safer to stay where we are.
A seamless transition can occur when the insurance partner utilizes a robust and comprehensive plan, employs the right people to effectively serve customers and performs ongoing evaluation of the systems and processes post-implementation.
The Right Process
The new insurance partner should employ a rigorous, well-managed transition plan to mitigate risk to a servicer and its customers. A successful transition methodology incorporates detailed project documentation to cover the project initiation, requirements, project schedule, design, testing, staffing, training and project closure. Project documentation should follow accepted Project Management Institute (PMI) guidelines, clearly outline key milestones and require joint approval by the servicer and insurance partner of those key milestones before proceeding to the next step. This ensures that the entire project team is aligned with the project deliverables, requirements, schedule and outcomes.
The insurance partner should utilize robust tools to gather the information for a successful transition. Knowing the right questions to ask, what scenarios must be considered and common pitfalls allows the implementation requirements to be thoughtfully constructed so omitted items or surprises are avoided.
The insurance partner should also perform a compliance review to identify regulations related to the products and services that will be provided to the servicer to ensure regulatory compliance. Any gaps between the servicer’s existing insurance program and the current interpretation of regulations should be identified, and an action plan should be developed with the servicer to bring its program into compliance as part of the overall implementation.
The transition must include a long post-transition monitoring process to monitor key processes that impact the servicer’s systems as well as their customers.
The cutover plan designed by the insurance partner (and approved by the servicer) to transition the loans from the current insurance partner must thoroughly address how the following items will be handled:
- Focus on zero impact to the servicer and their customers in terms of customer service, LPI activity and escrowed insurance payments
- Transfer of insurance information (paper and electronic), including effective handling of assigned post office boxes for incoming mail and EDI relationships
- Creation of a comprehensive plan for in-force and in-cycle LPI activity to avoid negative customer impact
- Timely cancellations of LPI with the prior insurance partner when traditional insurance is received, loan pays off or other cancellation events occur
- Transfer or forward of toll-free customer care telephone numbers
- Forwarding of carrier refund checks
The Right People
The insurance partner should provide a project team composed of dedicated business analysts, application developers and quality analysis testers to support the integration. The larger project team should include highly-experienced staff encompassing the areas of compliance, LPI product, training, operations, claims and relationship management to support the servicer from transition through production.
In preparation for the go-live date of the transition, the team of associates who will answer phone calls, update insurance information and pay claims must be ready and trained with the most current and innovative training modules. The staffing plan should account for ample staffing that allows a gradual ramp-up of productivity in order to ensure quality processing throughout the transition.
Assuring success of the service delivery team requires a well-designed training curriculum and proactive production support and oversight. The training, procedures, operations and quality control teams must work hand-in-hand to develop curriculum, understand the voice of the customer and address potential gaps and opportunities.
Training should include structured programs which create a culture that the team is an extension of the servicer’s operations, ensuring all quality and compliance standards are met. Service rehearsal training programs must be in place to heighten the learning experience and ensure customer satisfaction. New employees need to demonstrate a level of capability and competency via knowledge and skills assessments before they are deployed to their respective processing team.
Concern: We are too busy with other initiatives to devote resources to an insurance partner transition.
Partnered engagement allows the transition to be efficient, collaborative and well-executed. With the right insurance partner, the servicer’s efforts can be reduced to a defined number of resources. For a well-run transition, the servicer should plan to allocate resources for the team functions below:
- Project Sponsor – decision maker(s) responsible for final approval of all project artifacts and business decisions relating to insurance processing
- Project Manager – oversees the servicer’s activities, help coordinate meetings and resolve issues
- Subject Matter Experts – participate in the compliance process review and business requirements design
- Technical Lead – provides information on data definitions, layouts, processing schedules and connectivity
The insurance partner should create and manage the project schedule and maintain deliverables for the servicer and the insurance partner to minimize the workload for the servicer. The transition process should be collaborative – driven by the servicer’s needs and informed by the insurance partner’s expertise.
Being told “this is the way we’ve always done it” or “this is the way everyone else does it” is not a valid response from the insurance partner. The program to be implemented should meet the servicer’s current needs while being easily scalable to accommodate future growth.
Using this proven methodology, National General Lender Services has successfully implemented numerous servicers over their 40 years in the LPI industry. Company President Art Castner stated, “Creating and delivering a compliant, customer-centric insurance program that effectively mitigates risk for our servicer clients is a core competency for our organization. We pride ourselves on establishing a collaborative relationship with our clients and using our tools and expertise to create an effective transition and implementation process.”
By choosing an insurance partner with the appropriate experience, methodology and controls to support a smooth transition, servicers can obtain the best experience for their customers, their investors and their own operations.