Thinking About Adding Insurance as a Product Offering? Here’s What Mortgage Leaders Should Look For

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You might be familiar with the concept of embedded home insurance — where customers can compare and purchase insurance policies directly within the experience of buying their home or managing their mortgage. As a mortgage leader, working with an insurance partner can help your customers and loan teams in many ways, from creating value for customers through a complementary product, to reducing problems with home affordability, to streamlining the closing process and even adding an ancillary revenue stream.

If you’ve decided to implement an embedded home insurance solution, it’s important to understand what to look for to decide if the solution is the right fit for your company. Before you move forward, take a look at these four major categories to assess when you’re evaluating options.

1. A robust carrier network

It’s no secret that today’s insurance market is challenging. In 2023, there was a 35% drop in policies available per customer. Plus, the combination of natural disasters and inflation resulted in an 8.6% premium increase for new policies, and an incredible 23.7% increase for renewal policies. When paired with higher mortgage rates, these factors are causing DTI issues for 68% of lenders in the U.S. Many existing homeowners also face affordability issues because of insurance increases that raise their escrow payments. 

Because of these challenges, it’s beneficial to provide customers with access to a large carrier network — from well-known, national carriers to specialized and regional carriers. The more options you provide, the better the chance that a borrower can find a policy that fits their needs and saves them money in a tough insurance market. A quality carrier network from an embedded home insurance partner allows customers to compare multiple options from top rated insurers. Matic’s digital marketplace connects borrowers and homeowners with over 40 A-rated carriers in all 50 states. 

2. An easy shopping experience, no matter how borrowers want to buy

Most mortgage lenders can relate to buyers putting off their homeowners insurance search only to delay closing. In fact, Matic’s research reveals that 37% of mortgage teams experience internal frustration in the insurance process, and nearly 60% experience delayed closings because the proper insurance documentation isn’t in place. Choosing an insurance solution that creates a frictionless and easy shopping experience for your customers can help reduce the time it takes to secure insurance, speed up the closing process, and create a great customer experience that increases brand loyalty for your company.

To do this, you’ll want to choose a solution that meets customers where they are. Some borrowers want to purchase a policy completely online, and others want to work with real people for help. While you might expect that most customers want to complete the process digitally, the truth is that home insurance can be confusing — borrowers often have questions about their policy and coverage options, and many prefer to work with experts to guide them through the experience. Because of this, mortgage lenders should look for an insurance partner with a licensed insurance agency in addition to a digital comparison platform. Matic’s agency is licensed in all 50 states to provide excellent coverage for homes across the U.S. Plus, partners that use Matic see an average 2-3x increase in customer retention.

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3. A truly integrated offering

It’s common for loan officers to work with local insurance agents or let the borrower find a policy on their own, but there are a number of reasons why an enterprise-wide integrated solution can be a great alternative. 

Avoid a slow shopping process. When left to their own devices, customers can take a long time to research and purchase an insurance policy, and provide you with the proper documentation. When using an external platform or a local agent, the customer has to manually provide the policy details to their lender or servicer. Plus, they may not have access to a wide network of carriers and can end up paying more for their policy — potentially leading to DTI issues.

Integrate the customer experience. Traditional policy shopping is not ideal because borrowers get pointed outside your tech stack. An integrated customer experience keeps home insurance inside your company’s ecosystem, which streamlines the overall financing process.

Reduce processing time. Not all insurance platforms actually integrate into the mortgage process, which can create a cumbersome policy validation and approval process for loan teams and a disjointed experience for customers. Before you choose a partner, find out exactly how the touch points and quote comparisons are completed leading up to closing or during the servicing lifecycle. With the right tech-first approach, you can create a personalized experience and trigger automated insurance offers at the right moments for your customers. Matic provides a frictionless shopping process that reduces the time it takes borrowers to research policies. We also automate document delivery to your processors. And because our tech integrates with your data, we ask fewer lengthy questions about the home without sacrificing due diligence. 

4. Compliant borrower options and technology

As you venture into embedded insurance options, you’ll want to choose a partner that has an understanding of highly-regulated industries, particularly the mortgage and banking sectors. It’s important to lead with a compliance-first approach both from regulatory and customer service perspectives. Matic has a track record of passing major third-party audits and an in-house compliance team experienced in helping lenders add home insurance as a compliant ancillary revenue stream.

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