Summer is approaching fast, and with it will come a familiar challenge for mortgage and auto lenders: natural disaster season and the subsequent property damage that leaves borrowers scrambling for resolution. The unpredictable nature of storms means assisting your customers in their time of crisis can be as unpredictable a process as the storm itself. Fortunately, there are ways for lenders to prepare themselves for what’s to come while getting borrowers ready to take on potential setbacks with the least amount of difficulty.
To help lenders think ahead, we suggest three pre-disaster questions lenders should ask themselves and three ways to help customers in the aftermath:1. Do you have proper insurance coverage on your portfolio?
Insurance monitoring in the months preceding disaster season is of paramount importance in preparing for disaster season. Lenders face increased risk of loss when they have insufficient coverage or the wrong kind of coverage on property that serves as loan collateral. Factor in the effects insufficient insurance would have on the borrower—like defaulting on a loan due to an inability to get effective property repairs—and proper coverage becomes even more critical.
Lenders must ensure that collateral is protected from losses due to a wide range of perils and other risks brought on by natural disasters. All properties should be checked to make sure the right coverage exists for the right perils, and to ensure flood coverage exists where required under the National Flood Insurance Program (NFIP). 2017’s Hurricane Harvey is an example of the importance of sufficient coverage, as the storm caused roughly $125 billion in damages1 while less than 20 percent of Harvey’s flood damage victims had adequate flood insurance on their properties2. Lenders should also get creative about educating their customers on the value of Flood insurance, even in areas not recognized as “flood zones”.
Best Post-Storm Assistance: Incorporating Cutting-Edge Technology
The latest advancements in technology will prove invaluable during natural disaster season. Certain programs can now perform data analysis to determine probable storm damage within all timeframes; satellite imagery is also available to obtain information on whether properties in your portfolio have incurred damage.
Additionally, managing the repair process is crucial to your business. DIMONT, for example, has implemented a technology solution that can manage the loss draft and repair management process while providing consistency in communication and a better customer service experience overall. If outsourcing is what your company needs, look for ways the vendor can provide information that allows customers to have full transparency into the process.2. How efficient is your customer communication plan?
After a natural disaster, communication between banks and borrowers need to be seamless on multiple fronts. Borrowers will naturally have pressing questions when a natural disaster affects their property. Will they get a moratorium on payments for uninhabitable or unusable property while it undergoes repairs? How long will they have to wait to receive their insurance proceeds, and how quickly can repairs and property inspections be scheduled?
Regardless of the storm’s outcome, the lender has a duty to ensure that customers are aware of every step of the recovery process. With the help of reliable communication protocol, these questions can be answered with immediate answers targeted to specific issues. While victims of natural disasters may appreciate being informed of all recovery steps, they ultimately just want to get on with their lives; fine-tuning communication between borrower and lender will facilitate this process.
Best Post-Storm Assistance: Communication Consistency
Consistent communication will go a long way in putting customers at ease while they deal with the aftermath of a natural disaster. After a storm, proactive communication on case updates, notice of check deposits, and notifications on next steps are crucial to ensure customer satisfaction. Having protocols for frequency and method of communicating with your customers—whether it be text, email, or other platforms—is one way to allow for smooth, seamless return to normalcy for your borrowers, maintain your reputation, and limit further issues with collateral. This can be accomplished by having a team of well-trained staff or a vendor to relay reliable and educational information to customers.3. How will you manage your disaster-affected customers?
Once a natural disaster has run its course, it’s time to determine the best way to serve the borrower, whether it be providing a customer interface, having “boots on the ground”—as in teams of specialists able to provide in-person assistance at disaster sites—or being able to flex staffing as needed to handle the influx of activity.
To prepare for delivering post-disaster assistance, your agency will first need to determine if a typical property inspection report will be enough for the areas being covered. You’ll also need to establish the frequency with which you will want to re-evaluate borrowers’ progress on claims. With higher claims activity comes an increase in phone and email requests from customers, so careful planning of how to allocate your staffing resources will ensure you have enough available, knowledgeable staff to provide efficient service once disaster strikes.
Best Post-Storm Assistance: World-Class Customer Service
Borrowers shouldn’t have to endure additional inconveniences when dealing with the stress and financial strain of property damage. Instead, they should receive the best customer service your team can offer. Customers who feel taken care of by their lender will be more likely to absorb vital information regarding repairs and inspections. If your servicing agency has other opportunities to be of assistance, such as by sending care packages to affected customers, the chance that borrowers will understand that their lender is there to help increases dramatically.