Tuesday, Dec. 05, 2006, 07:00 PM UPDATED 11:59 AMBy Nick Zulovich
Eden Prairie, Minn. — Van Wagenen Financial Services has teamed up with Lee & Mason of Maryland to provide insurance and tracking services to financial institutions. As a part of this partnership, both companies' sales forces will be combined into a single entity, executives announced.
"We are particularly enthusiastic about the synergies that arise from this partnership," said Mary Wood, president of van Wagenen Financial Services.
"We can leverage our experience and suite of products with the numerous relationships that Lee & Mason has developed over the years to create a single source from which financial institutions can obtain many of the components necessary to mitigate the risks inherent to their business."
John Eckenrode, president of Lee & Mason, added, "Combining our strengths will be beneficial to both companies, as well as the financial institutions we work with. We have a good understanding of what financial institutions need to be successful. This new relationship offers them a broader array of risk mitigation tools to support their operations."
Van Wagenen Financial Services is a Minnesota-based company, whose founder — George van Wagenen — created the first blanket single interest insurance coverage in the 1940s, executives pointed out.
Today, the company provides collateral protection, tracking millions of loan and lease accounts throughout the U.S. and Canada. Its services include collateral protection insurance, vehicle lease tracking, blanket single interest insurance, mortgage insurance tracking, mortgage holder's E&O, in addition to impairment coverage and real estate property insurance.
Meanwhile, Lee & Mason has worked with more than 700 financial institutions and provides custom designed insurance programs for auto lessors and lenders throughout North America.
Most recently, Lee & Mason announced it is offering auto lenders a new program called Debt Protection that is designed to help increase loan contract volume, decrease delinquencies, increase fee income and more. Debt Protection can be added as an addendum to a loan contract.
Through the program, the lender has the opportunity to waive or cancel all or some portion of the borrower's debt in certain situations such as involuntary unemployment, disability, death, voluntary leave of absence, hospitalization, call to active duty and more, explained Scott Zucco, senior vice president of Lee & Mason.
Lee & Mason said it can work with auto lenders to create both dealer programs, as well as post-sale direct-marketed programs.
"The borrower pays an up-front fee calculated as a percentage of the monthly payment," Zucco said. "The customer signs an addendum to their original loan contract. The bank is incentivized by increased dealer volume and incremental fee income.
"The risk is the borrower's, not the lender's, even though the lender will benefit from reduced delinquencies," he continued. "The cost is driven by the desired coverage levels and typically runs between 4 to 6 percent of the monthly payment. These programs are designed and customized by the lender for the dealer. Normally, optional coverage packages are created."
He went on to highlight the fact that Debt Protection is not an insurance product. This means no insurance licensing is required, nor are insurance audits or examinations needed, among other benefits. However, Zucco pointed out that state regulations vary.
"A handful of states still regard Debt Protection as an insurance product, therefore limiting its viability," he said. "Dealers and lenders can Lee & Mason directly to learn more specific information."
In addition to the program helping to reduce delinquencies, increase loan volume and drive additional fee income, Zucco said another benefit is that Debt Protection offers lenders a method to differentiate themselves from their competition.
"Debt Protection programs also allow the lender to layoff all or some portion of the risk," he pointed out. "This is done in the form of a 'CLIP,' or contractual liability policy."
As for the benefits to consumers, Debt Protection can give them the assurance that in some unforeseeable circumstances their auto payments will continue to be made, they will still have transportation and their credit ratings will remain protected, Lee & Mason reported.
According to the company, the programs can be tailored so that there are no age limitations, no partial coverage due to term or loan amount and no health questions.
"This is a win-win-win opportunity for the lender, dealer and borrower. The dealer benefits from commissions and new product options. The lender benefits from increased volume and fee income, while providing the borrower with peace-of-mind coverage against life's unforeseen events," Zucco concluded.
Lee & Mason works with Assurant Solutions, who provides full administration capabilities and contractual liability policies for debt protection programs.
For more information on Debt Protection, Lee & Mason of Maryland Inc. at (410) 785-3800, or visit . For more information on van Wagenen Financial Services, visit .