NAFCU Podcast: The Current State of CPI

The pandemic and rapidly rising rates has caused an unprecedented shift in the market. Join Anne Holtzman as we discuss the current state of CPI and the importance of having a proactive strategy.

In this episode:  

[01:49] The affordability of insurance along with the affordability of vehicles is seeing insurance cancellations on the rise. Average loan balances have increased by almost 38% from 2021 to 2023.  

[02:23] All of those levels point to a need for a lending institution to have a collateral protection or risk management insurance program.

[03:47] The average collateral protection insurance loss was around $3500. In 2023 the average is over $6000.  

[04:51] Collateral protection insurance not only protects the lender’s financial interest in the collateral it also has a dual interest effect to it. That policy is applicable to the borrower as well. 

[10:15] When you look at all the data out there, 2024 is definitely going to see the decrease of used car values that we are going to normalize. If those loans were made from 2020 forward deficiency balances could be larger than we have ever seen them. The pressure on lending institutions to be able to collect that deficiency balance gap through collateral protection insurance programs is going to be an absolute focus. 

[11:48] We will see some of the severity in collateral protection normalize but it is still going to be high because low balances and vehicle demand is high.