Non Payment Insurance
Why You Need Non Payment Insurance In Today's Economic Climate
As a lender, you know how important it is to recoup your losses from your borrowers. in today's unprecedented economic climate, it can be hard to know when you're going to get your money. Between people being laid off, staying home from work to look after kids and/ or immunocompromised loved ones, or simply struggling to make ends meet, non payment insurance is more important for banks than ever.
Non payment insurance for banks may be a relatively new idea at your institution, and for good reason. Many banks offer credit insurance to borrowers, but they aren't required to take this insurance. This can mean that banks are left floundering when borrowers are unable to pay. While the threat of a decreasing credit score is enough to make many borrowers pay up, in today's economic climate, sometimes paying up simply isn't possible. This is why it's more important than ever that banks protect their money with non payment insurance.
Non payment insurance ensures that you're going to get your money, even if a borrower isn't able to pay. While you may not get 100% of the money back, you're likely to get between 75-95%, depending on the comprehensive non payment insurance company that you choose. Some banks wait until things start looking bad to purchase non payment insurance for banks, but it's actually a better idea to purchase non payment insurance early. When you have non payment insurance, funds are immediately freed up, and you're able to lend more money, and therefore, make more money.
Let's take a look at some of the benefits of purchasing non payment insurance for banks:
Increased risk appetite: When you purchase non payment insurance, you're able to take on larger loans that you would have been able to take on previously. This allows you to be seen by larger clients, and can increase your bank's overall revenue. The money you've lent out can be seen as already paid back due to your insurance policy, as there's no question of whether you'll be able to recoup your losses if your borrower is unable to make good on your loan agreement.
Upfront revenue: When you're able to pull in larger clients, you're not just gaining income from interest - you're also able to charge larger upfront fees, especially if other banks in your area are not able to offer loans at your level.
Regulatory benefits: Non payment insurance can help optimize your bank's regulatory capital, which means that you may be eligible for larger loan amounts or lower interest rates.
Competitive advantage: When your bank is able to offer loans at levels that other banks can't match, you have an instant competitive advantage over other banks. The ability to bank shop can save you significant amounts of capital as you pay back your loans over the coming years.
If you're searching for the right insurance company for your bank, reach out to Prudence Insurance Brokers LLC. We'll work with you to provide the comprehensive non payment insurance that makes the most sense for your financial institution. If you're not sure where to start, or what type of policy you need, rest assured that we'll provide you with the guidance and knowledge to help you make the right decision.