Embedded Home Insurance Platforms: The new secret sauce to improving the mortgage process.
EY, the professional services and accounting powerhouse, recently predicted that in the next five years, more than 30% of all insurance transactions are likely to take place through embedded sources. This should come as no surprise once credit unions discover the myriad benefits of a well-designed insurance sales strategy that includes embedded insurance technology. This particular technology allows members to easily purchase policies they need through a source they trust: their credit union. It not only delivers positive member experiences, but it also provides a new source of revenue for the credit union as well as an extra competitive edge.
Mortgage lenders will instantly recognize how valuable an embedded approach to procuring homeowners insurance can be to the home-buying process. Proof of sufficient homeowners insurance at a home purchase closing is necessary to ensure the credit union’s interest is covered against property damage or injuries on the property. Yet even as they understand the importance, homebuyers tend to underestimate the time required to complete this step when using the traditional, analog approach. It can take many days to choose a provider, complete an application, get approved, and provide proof of insurance in time for the lender to have a final, accurate Closing Disclosure at the scheduled closing.
Any delays along the way often result in such complications as document revisions, compliance challenges, and even postponing the closing date. In short: it can become one of a mortgage lender’s biggest nightmares!
Embedding an insurance procurement platform into the mortgage process overcomes these challenges. It gives lenders more control by allowing them to ensure the buyer selects the appropriate amount of coverage. It also enables members to undertake this step simply and efficiently, including getting access to expert guidance whenever needed.
Here's how the process works:
Easy online carrier selection delivers proof of insurance seamlessly.
When it’s time to procure homeowners insurance, the credit union sends the member a link to their embedded insurance platform with directions to complete the application online. Lenders can either pull the home and property data directly from the LOS database or guide the member to manually input the data into the application.
Once the homebuyer submits the application, the platform returns the top three recommended insurance carriers based on the best premium price for the required coverage. The buyer completes the transaction by selecting a carrier. The payment receipt is uploaded to the loan file, instantly giving the loan processor the proof of insurance needed for closing.
Experienced customer service support provides a comforting personal touch.
Today’s insurance landscape features robust digital interconnectivity, so most policies can be processed and issued as efficiently as described in the section above. However, there will always be exceptions. Some typical examples: Few carriers insure homes in California and Florida. The system will typically provide at least one carrier option, but the borrower may have questions or need advice in considering other carrier choices. Buyers purchasing a home on a barrier island might require specialty lines of insurance, such as a state-sponsored Fair Plan, that will likely need personalized expert advice.
That’s why, to be successful, an embedded insurance platform should include a customer service 800 number that’s staffed with knowledgeable representatives who can offer expert live support. This personalized guidance provides the necessary human touch needed to quickly address unique situations, answer pertinent questions, and avoid customer frustration. It’s a critical component to ensuring that even challenging policies can be delivered on time.
Plug-and-play platforms require no incremental staffing and minimal overhead
Well-designed embedded home insurance platforms make it remarkably easy for credit unions to provide this extra service to their members. Currently these platforms support both purchase and refinance loan transactions. Thanks to their comprehensive nature, embedded insurance platforms can be incorporated into a credit union’s services without hiring staff or acquiring insurance licenses. What’s more, integration costs are nominal and typically there are no transaction fees. And platform deployment is efficient. Depending on the organization’s IT capabilities and the platform itself, set-up time takes between four and six weeks.
Any mortgage lender will clearly benefit from an embedded homeowners insurance solution. Yet it’s especially helpful for credit unions with multiple branches. It allows them to easily scale the efficient delivery of homeowners policies and provides a consistent and positive customer experience across their entire enterprise.
Staying relevant by embracing the latest benefits of digital technology is critical for the future of any credit union. Adding an embedded homeowners insurance platform to their member services is a low-cost, win-win strategy that elegantly solves a persistent challenge in the mortgage lending process. It reinforces member satisfaction, adds a valuable new revenue stream, and helps lenders maintain their competitive edge.