Insurance Guide for the Mortgage Industry

Mortgage lenders are no strangers to managing risk. Factors like credit risk, interest rate risk and market risk represent many of the direct threats and profit opportunities within core product lines.

There are operational risk factors, however, that are often entrusted to a third-party insurance broker that present significant opportunities to boost profitability and mitigate potentially disastrous setbacks.

The most successful companies that we work with carefully balance risk and opportunity within their insurance programs, ensuring that they do not waste money over-insuring their risk or expose their company to ruin by failing to adequately prepare for unexpected losses.

Simply put: mortgage companies run their insurance programs the same way they run their core business.

This document is intended to serve as a no-nonsense, plain English guide to help you optimize your organization’s Commercial Insurance and Employee Benefits strategy to boost profitability and mitigate risk.

Insurable Risks

Some common insurable risks for lenders include (but are not limited to):

- - Healthcare / Employee Benefits
  - General Liability and Commercial Property
  - Errors and Omissions
  - Cyber Insurance
  - Social Media Liability
  - EPLI

Employee Benefits

The average IMB allocates 20-25% of their expense budget to employee benefits, with the company health plan driving the majority of this expense.

A health plan designed by a publicly traded insurance company will naturally prioritize their own shareholders, where a health plan designed solely for the benefit of the employer can direct all funds to employee compensation and well-being.

What is “risk” as it relates to the health plan?

A company’s total health plan risk is simply the total of expected and unexpected healthcare expenses during the plan year. If a plan is suboptimal, they are either:

Using more healthcare than they could be
Paying more for healthcare than they should be
Both the above

Mitigate

A plan should incentivize behaviors that lead to fewer and lower cost claims. Naturally, this goes hand in hand with creating a healthier population.

This means eliminating barriers to care, providing guidance and education around potential therapies, and making it easier and less expensive for members to pursue earlier, more conservative intervention.

Once a plan begins to optimize utilization of predictable and controllable care, we focus on the infrequent, significant, unpredictable losses.

Transfer

Catastrophes and “black swan” diagnoses happen. Sometimes we can improve cost or outcome to reduce the financial liability – sometimes we cannot. In this small percentage of scenarios, it makes sense to transfer the risk via Stop-Loss insurance.

Stop-loss contracts are complicated, with many policy options and bells and whistles to choose from. It is important that you partner with a trusted insurance advisor to help you understand the risk you are retaining and the risk you are paying to transfer.

Please note that there is no free lunch, and we cannot transfer known risk. Large claims that carry over from one policy year to the next will eventually be priced into your contract. To protect against multi-year risk requires thoughtful planning and preparation prior to placing the original contract.

Finance

When you’ve done all that you can to improve utilization, and you’ve successfully transferred any unknown risk beyond your comfort level, you pick up the tab.

Claim financing is no different from any other type of borrowing. The more cash flow protection you require, the higher your financing costs.

The Experts

Taylor Rogers

Executive Vice President

taylor.rogers@thinkccig.com (512) 422-9269

Taylor’s background in finance enhances his ability to create pathways for his clients to realize better physical and financial outcomes for their employees and benefit plans. After several years in the insurance industry, Taylor specialized in employee benefits to help companies make the strongest decisions in sourcing, funding, and structuring their programs.

By blending his background in finance and insurance, Taylor offers a comprehensive approach to creating employee benefit programs that not only retain talent but also attract top performers. He helps companies enhance their bond with employees with generous benefit offerings that also support the company’s financial and business goals.

Rich Hejny

Executive Vice President

rich.hejny@thinkccig.com (512) 420-7333

Rich has over a decade of insurance experience, having worked for a national health insurance carrier and a third-party administrator before joining CCIG. Recognizing a wide gap in the traditional model of health insurance, he has spent his career demonstrating that controlling healthcare costs and offering robust benefit plans don’t have to be mutually exclusive.

The first step in Rich’s approach is to truly get to know and understand his clients’ businesses, then create a personalized benefit plan based on the company’s size, financial goals, and internal culture. Rich’s passion for building strong relationships allows him to support companies as they move towards an innovative, tailored strategy designed to strengthen the company.

Get Started Today!

Please complete the form below.

Rich & Taylor will reach out to you directly to schedule time for an introductory meeting.

The Sip

Featuring CCIG, LeaderOne Financial & Mountain West Financial

CCIG is a partner and member of the Mortgage Collaborative

About CCIG

CCIG IS A FULL-SERVICE COMMERCIAL LINES, SURETY, EMPLOYEE BENEFITS, AND PRIVATE CLIENT INSURANCE BROKERAGE

Since 1985, CCIG has been a fiercely independent, rapidly growing insurance brokerage, delivering comprehensive risk management and insurance solutions to our diverse clientele. With a national presence, we employ over 120 seasoned insurance professionals and operate from our offices in Denver, CO, Austin, TX, and Pheonix, AZ.