Improving online lending profitability with embedded payment protection

Traditional loan underwriting can't foresee life's unexpected events, such as job loss or disability, leaving both borrowers and lenders vulnerable.

New research reveals how embedding payment insurance directly into loan products could help reduce delinquencies and default losses. Discover actionable insights on how you can enhance borrower security, improve portfolio performance and differentiate your lending offerings in a competitive market.

Key findings include:

• Many lenders could achieve a 20% reduction in charge-off costs with embedded loan payment insurance – A growth-focused lender originating at least 10,000 loans a month with an average monthly payment of $500, and a standard default rate of 1.65%, can save $42 in charge-off costs for every $1 in insurance premiums.¹
• Embedded loan payment insurance helped one lender avoid an estimated $316,000 in charge-offs – The interest retained on those loans that would have otherwise been charged off was nearly $300,000. The total financial benefit to the lender was more than $615,000.¹
• Embedded loan payment insurance could be a cost-effective way to attract more borrowers – In addition to attracting new customers, embedding loan payment insurance may help you reduce abandonment rates, decrease acquisition costs and retain customers.

_{¹Cornerstone Advisors, Improving online lending profitability with embedded payment insurance, June 10, 2024}

_{TruStageTM Payment Guard Insurance is underwritten by CUMIS Specialty Insurance Company, Inc. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Product and features may vary and not be available in all states. Certain eligibility requirements, conditions, and exclusions may apply. Please refer to the Group Policy for a full explanation of the terms. The insurance offered is not a deposit, and is not federally insured, sold or guaranteed by any financial institution. Corporate Headquarters 5910 Mineral Point Road, Madison, WI 53705.}

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