This week we’re featuring Proctor Financial, Inc. (PFI), which is headquartered in Troy, Michigan.
PFI provides lender placed hazard insurance products for borrower and bank-owned properties to financial institutions (mortgage servicers, banks, credit unions, and private investor groups) and through property/casualty insurance agents working with these entities. The firm pioneered the concept of lender placed insurance in the 1970s, and today is a wholly owned subsidiary of Brown & Brown, Inc., the seventh largest independent insurance intermediary in the United States with $2.7 billion in market cap.
We spoke with Diane Whipple, Senior Vice President, Sales & Marketing, of PFI about the firm and its products. Diane first joined PFI in 1989 and rejoined in 2007 as Senior VP. She is responsible for new business development, client retention and all corporate communications and marketing functions.
“What makes us different in addition to our insurance products,” explains Diane, “is that we provide a spectrum of administrative options that save our clients time and money. Our goal is to offer a customized solution based on our clients unique business needs versus a one-size-fits-all solution. We want to understand the financial institution’s business objectives, where its pain points are, and then make insurance or administrative recommendations that address those points specifically.”
PFI’s products are primarily designed for any entity that services mortgage loans, whether residential, commercial, or REO/foreclosed properties. There are three main insurance products: Lender Placed Hazard (Mortgage Guard®), Lender Placed Flood (Bridge60®), and Hazard and Liability Insurance for residential and commercial foreclosed/REO properties (REO Guard®).
“We can bundle our programs together, or we can sell them individually,” Diane says. “The Lender Placed Hazard and REO insurance products are written on an all-risk basis that includes theft, vandalism and third-party liability coverage on REO properties. The key difference in our Mortgage Guard® program is that claims are paid and settled on a replacement cost basis without the requirement to repair. This is advantageous to our clients because it may not be in their best interest to repair an REO property that is currently for sale.
“Our Bridge60® product is a reporting form-type program designed for residential, commercial, REO, and mobile home properties located within mandatory flood zones. Whereas the National Flood Insurance Program (NFIP) requires an extensive application to be completed to underwrite coverage for a borrower, PFI underwrites the financial institutions at the inception of the program and provide rates for ease of administration. No individual property underwriting is required under Bridge60® and it meets the NFIP requirements. Since the insurance administrations on the MortgageGuard® and Bridge60® programs are identical, bundling them with one vendor or provider will result in cost savings to servicers.”
PFI’s competitive advantage lies with its suite of administrative solutions. “We do business with 1,700 financial institutions, and provide insurance products and services to 21% of the top 100 servicers in the country,” says Diane. “We’re able to service all sizes of financial institutions by offering proprietary technology and outsourcing services based on lender placed activity.
PFI offers web-based reporting for lender placed coverages, which is ideal for a smaller community bank that only has a few properties a year to report for coverage. PFI’s proprietary program, Inforcer, provides financial institutions with a solution to track their customer’s policies, send out notices to borrowers, provide on-line premium quotes, and do real-time billing and departmental invoicing. Diane states “Clients can also send lender placed additions and deletions through a file exchange.”
The Proctor Ensemble describes the outsourcing services PFI performs on behalf of financial institutions. PFI tracks a servicer’s hazard and flood insurance, will update insurance lines, open and scan mail, image and process insurance policies, ensure compliance, and more. “With this service, on behalf of our clients, we’re answering borrower phone calls, handling claims, and performing outbound call services to agents,” explains Diane. “The lender is reducing costly and time-consuming administrative tasks by outsourcing the work to Proctor Financial. We develop customized business rules with the servicer that allows PFI to become an extension of the financial institution and assists them in managing their borrower relationships. Furthermore, our tenure in this business, along with our knowledge of government regulations and compliance, is a tremendous advantage in today’s highly regulated environment.” All of PFI’s outsourcing services are provided through its home office in Troy, Michigan.
Diane also emphasizes that each client has a dedicated customer service representative who is available every day via a toll-free number. “Our clients are dealing with the same team of people on a daily basis,” Diane says, “and 95% of our claims are paid within 45 days…as this is ultimately what we’re in the business of doing…to pay claims.”
PFI’s suite of insurance products offers property/casualty agents an opportunity to provide additional solutions to their financial institution clients. “If you’re writing professional coverages, such as Bonds, Mortgage Impairment, and D&O, for your clients, you can also provide them with a coverage solution for REO foreclosed properties. We’re finding today that traditional writers of packaged policies that once allowed REOs to be scheduled on their forms as bank assets would prefer the bank insure these on a separate program. PFI can write REOs on a standalone basis if agents/brokers need a market for this type of coverage. Additionally, for those financial institution clients that already have another lender placed or REO program in place, agents have an opportunity to talk to us to see how we compare and whether we can improve upon the existing program.”