Simplify the lender-insurer information exchange

August 12, 2020 / 4 min read

Automation is key to greater efficiency, quicker payouts in the total loss process

With a seismic shift across the auto lending industry as a result of the COVID-19 pandemic, many lenders and carriers are learning how to best navigate new challenges. But one old challenge remains—disjointed communications between auto lenders and insurance carriers after a total loss.

With remote work as the norm during the pandemic and hurricane season in full swing, the strain on communication can be even greater on this ecosystem. Fortunately, innovation provides promise to remedy the issue.

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Identifying the Challenges of Volume Increases

When a borrower’s vehicle is deemed a total loss, it can take several days before the lienholder is notified, and even longer to receive payment for the loss. Those timeframes multiply after catastrophe events.

The current process involves an insurance carrier contacting the lender by phone, email, fax, or even snail mail. These manual processes are not only slow and inefficient, but also more onerous during high volume times. For example, when a hurricane strikes, average call volumes increase roughly five to 10 times, overloading networks and resulting in longer wait times.

When Hurricane Harvey made landfall in Texas and Louisiana in 2017, an estimated 500,000 cars may have been destroyed due to rising waters.[i] This year, NOAA’s Climate Prediction Center is forecasting up to 19 named storms, three to six of which could become major hurricanes (category 3, 4, or 5).[ii] These events will most likely result in a large number of total losses.

Communication Gets Lost in Translation

Adding to the slow, inefficient communication process are the different terms lenders and insurers use for key information identifiers.

Lenders can find themselves on the line with insurers for hours trying to match up critical data points in the total loss process such as loan numbers, policy numbers, and claim numbers. In the wake of a catastrophe, this inefficient process becomes time consuming, costly, and can require additional call center staffing resources.

Meanwhile, customer satisfaction suffers as borrowers have to wait longer to receive a settlement and shop for a new personal vehicle.

High Volume Requires Real-Time Tools

The manual process needs automation, which can benefit both lenders and carriers. Fortunately, there are solutions available to automate the communication exchange between the two entities by connecting industrywide lien, policy, and claims data.

With these solutions, lenders can be automatically notified when the financed vehicle has been deemed a total loss and insurance carriers can automatically receive the vehicle payoff information, which can lead to expedited payouts and a streamlined total loss process. The automated process helps enhance efficiency, save valuable time when peak call volumes hit, and improve the customer experience.

A Fresh Approach to Automation

As the industry continues to navigate unexpected events, the next catastrophe could be on the horizon. With the right tools and data, lenders and insurance carriers can gain significant competitive advantages by leveraging technology that creates an automated communication channel with insurers.

Verisk, a leading data analytics provider, offers solutions that can help lenders and insurance carriers optimize the total loss process—especially during high volume events. Drawing on extensive data assets, including industrywide claims databases composed of billions of data points, Verisk is uniquely equipped to bridge the communication gap between lenders and carriers with its next-generation solutions:

CV-VaaS automates the verification process by collecting key information from insurance policy and vehicle loan databases to ensure the loss payable clause is correct, helping to protect lienholder interest.
Total Loss Alert automatically notifies lenders when a financed vehicle is deemed a total loss, helping reduce delays so they can receive payouts quicker.
Lien Check automatically provides the payoff information carriers typically require to settle claims with policyholders, which helps reduce their cycle times, decrease loss adjustment expenses, and increase customer satisfaction.

Together, in an automated fashion, these solutions can help seamlessly connect those in the lending and insurance industries like never before and help provide faster and more efficient service to their mutual customers.

[i] Quartz. “Harvey’s victims will face a new challenge: how to get around without a car” https://qz.com/1066966/how-many-cars-were-destroyed-by-hurricane-harvey/

[ii] NOAA. “Busy Atlantic hurricane season predicted for 2020” https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020