Looking Forward: Three Insights for Auto Finance
May 6, 2020 | Produced by Suzi Straffon, Director of Finance Company Markets
The coronavirus pandemic continues to halt production and business across industries. Many employees are facing remote work, furloughs, or layoffs as uncertainty continues to swirl around next steps. Many financial institutions, considered an essential service, are scrambling to serve their consumers and employees, while also navigating local and federal government expectations. It's critical to consider not just what’s happening today, but what the short- and long-term future may hold.
Many finance institutions are providing relief to consumers by deferring or waiving upcoming payments which in turn is impacting insurance tracking, insurance recoveries, total losses, GAP and other risk management programs financial institutions have in place. This article highlights three industry insights:
1. Lenders and Insurance Carriers Offer Consumer Relief
Across the industry, lenders have implemented varying consumer relief programs to help alleviate the financial burden facing consumers during the pandemic, including payment extensions, late payment forgiveness, and deferment. Institutions have also adapted to providing loan services via technology and remote services. Many insurance carriers are also returning premiums via credit or refunds due to less people traveling and driving. These consumer programs demonstrate the current behavior and sentiment facing the industry grappling with COVID-19. Adapting to remote service operations, limiting certain operations, industry shut downs, and increased calls has challenged the industry to both accommodate consumers and keep business operations running.
2. Repossession Activity is Facing a 'New Normal'
Many auto finance institutions have instituted 0-90 day moratoriums on new and existing repossessions. However, while repo activity is essentially on hold, it is expected to return in full force once deferment programs end.
Finance institutions need to plan ahead to prepare resources accordingly to anticipate the increased service demand. Meanwhile, while service remains on pause, now is a great time to focus on inventory and review all pending claims to evaluate resources that will be needed when active service resumes. The new normal will likely come in stages based on guidelines and mandates from different states and the federal government.
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3. Regulatory Activity Remains Active
Tracking and reporting on collections, repossession, recovery and remarketing is more critical than ever due to the rapidly changing nature of regulations and guidelines during the pandemic. Almost all states have specific guidelines and recommendations for lenders relating to moratoriums, inability to cancel personal insurance programs and commercial insurance programs affecting GAP and Total Loss, as well as policy filing extensions for consumers, lenders, and businesses. Ongoing review and application of all regulatory changes should be applied to service operations.
To best assess what’s next, lenders need to evaluate current processes and procedures in place and how they can be improved or adapted to a rapidly changing industry environment. In the midst of uncertainty, creativity in operations, customer service, and employee and customer engagement can provide valuable insights that help steer the industry toward recovery.
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About Allied Solutions
Allied Solutions, LLC is one of the largest providers of insurance, lending, and marketing products to financial institutions in the US. Allied Solutions uses technology-based products and services customized to meet the needs of 4,000 clients, along with a portfolio of innovative products and services from a wide variety of providers. Allied Solutions maintains over 16 regional offices and service centers around the country and is a subsidiary of Securian Financial Group, Inc.
Content in the blog posts are the opinion and views of the writer, and don't necessarily reflect the opinions or views of Allied Solutions.