Every financial institution has unique insurance needs. It is important to take a holistic approach when exploring risk mitigation options. The key questions to ask yourself when deciding on how to manage risk in your loan portfolio are:
- How much risk can you tolerate versus how much do you want to transfer?
- What are your goals and objectives?
- What do you expect in return?
Self-Insurance
Can a lender skip the trouble of finding a collateral protection insurance provider and simply self-insure its auto loans? Yes, but similar to not wearing a seatbelt while driving, doing so increases the risk of unfavorable financial outcomes.
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