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What is Insurance Outsourcing? A Video Interview with the Mortgage Bankers Association

Our Senior Vice President of Sales, Mike Dimas, sat down with the Mortgage Bankers Association to discuss insurance outsourcing — what it is, why servicers choose to outsource their insurance operations, what to consider when choosing an insurance tracking vendor, and more.

Watch the video or read on for a summary of the video to learn more:

What is insurance outsourcing? When should companies consider outsourcing their insurance operations?  

Insurance outsourcing is a way to move a servicer’s insurance operations to a third party, like BBVA Insurance.  In doing so, a servicer is transferring all of that day to day work to that third party — such as the call center, escrow payments, and all operations that are important to the insurance tracking process.

One thing to be clear on: this is not PMI and this is not mortgage insurance. Outsourcing insurance tracking is specific to homeowners insurance, flood insurance, etc. 

We always explain to our clients that working with BBVA Insurance is not hire us, walk away, forget it. It’s a collaborative effort, day in and day out, between the servicer and BBVA Insurance (or whomever the third party insurance vendor may be).  

What are some recommendations you would give to a servicer who is looking to outsource their insurance tracking operations?

What’s important is to understand why people outsource. It’s usually two reasons.  

  1. To offset expenses.  
  2. Risk mitigation.  

When we’re talking to servicers about why they might outsource, we discuss those two things.  In addition, we advise servicers to evaluate the following:

  • size & scale
  • historic information
  • technology

Size & Scale | When evaluating a third part insurance tracking vendor, take a look at the size of the company and years in service. Proctor Financial and Loan Protector joined forces two years ago to become the third largest insurance tracker in the mortgage servicing industry and the largest insurance tracker not owned by an insurance carrier.

With all of the acquisitions and MSR activity that’s happening today, a lot of organizations need a partner that can scale and grow with them very quickly. This is why it’s important to ask questions about size and scale; the insurance tracking vendor should be able to grow with your business.

Historic Information | Request to review the third party vendor’s historic information during your due diligence to prove their ability to perform to your standards. What are their service levels? How have they performed for similar companies or your peers?

Technology | Get a demonstration of the third party vendor’s technology. Ask tough question to make sure that the vendor can show that they can do what they say they can.

From a borrower standpoint, what are the benefits of outsourcing insurance operations?  

There are many benefits.

Cost and risk mitigation are important benefits.

Upon evaluation, a servicer may be able to save money, keeping in mind that there are many tangible and intangible benefits to outsourcing.

Risk mitigation is probably the most important benefit that impacts your borrowers. In choosing the right insurance tracking vendor, you shift the risk to subject matter experts. When we talk about the borrower and how critical they are to all that we do, having key people within the organization (from a call center agent to a senior leader) who care and understand why a borrower is making contact, is critical for a positive borrower experience. If a borrower has a request or question or concern, it can be difficult for people to address who are not experienced subject matter experts. 

Creating a frictionless, easy customer journey where they can get their questions answered correctly and timely is the borrower benefit when their mortgage servicer works with a third party insurance tracking vendor.

What is the one thing that you want people watching this video to take away?  

In my 16 years of industry experience, I’ve learned that it’s based on relationships, friendships, and trust. Our best clients are the ones we’ve built solid relationships with.

At the end of the day, we’re all here earning a paycheck. We’re all here to to pay bills, but that doesn’t mean you can’t work with and be partners with people that you like and enjoy. We’ve nurtured so many great relationships and friendships over the years that it’s become the central theme to what we’re doing. It’s about partnership. We want to build that like and trust with all of our clients — and that’s why it is most important partner with a third part vendor that you like and trust.