It began with a problem years ago, back when consumers started shifting online, particularly when financial transactions started going digital.
As borrowers gravitated to the Internet to do business with lenders, the need for insurance products to keep up became more and more pressing.
That included lending insurance, a category of products designed to protect borrowers in case of unexpected covered losses that could lead to defaults. In its early stages, people would visit a financial institution branch to secure a loan and purchase ancillary products.
And while that in-person experience still happens today, TruStage recognized the opportunity to reach people where they’re increasingly doing more and more of their financial business today: online.
TruStageTM Payment Guard Insurance, introduced early last year, is its digital lending insurance solution for customers, who more and more use their mobile phones and connected devices to take out a loan instead of visiting a bank branch.
Danielle Sesko, TruStage’s Director of Product Management and Innovation, says beyond meeting customers where they are, the Madison, Wisc.-based company has introduced innovations that make credit more accessible and help lenders build a more resilient loan portfolio.
The creation of Payment Guard involved consulting over time with both borrowers and lenders to fine-tune the right solution.
“We didn’t hone in on the current design of Payment Guard until we went through multiple iterations of that ‘testing data, gathering feedback’ loop,” Sesko said.
“Companies behind TruStage have over 80 years of providing lending insurance. Within this time, we identified a problem that we believed was worth solving. In order to validate that we fully understood that problem, we first reached out to the market – we spoke with lenders and their borrowers to understand the pain points from their perspectives. We then ideated on better solutions and brought those back to the market for feedback. We continually iterated on various solutions before we designed the product itself. “
Payment Guard offers a simplified design that’s less expensive than traditional credit insurance and doesn’t modify the original loan terms.
It’s delivered with no friction in the loan origination UX, uses data from the loan app to qualify the applicant and is configurable for most lending categories.
“It’s truly built as a component of the loan itself, and we did that consciously because it helps to remove friction from the online loan flow,” Sesko said.
“When someone goes online to take out a loan, they’re going online to get the loan — they’re not going online to be upsold ancillary products through that experience — so what was important to our lenders … was not to add any friction or disruption to that loan flow, and in order to do that, we had to leverage invisible embedded design.”
Not only is Payment Guard configured to reduce such friction, it’s also designed to be an added benefit delivered by digital lenders, immediately covering borrowers in case of covered job loss or covered disability when their loan is funded at no additional cost to them. It’s customizable to accommodate the lender’s budget and needs and has a seamless no-code implementation.
It’s designed to help lenders attract more borrowers and bolster their portfolio’s performance while reducing time spent on collections, Sesko says.
“Based on the data from the Federal Reserve Bank of New York, the total household debt in the United States as of the third quarter of 2023 stood at approximately $17.29 trillion1. With a delinquency rate of 2.52%, as indicated by the Federal Reserve’s Economic Research Division, the total delinquent debt amounts to about $435.71 billion2. If we assume that 23% of these delinquencies can be attributed to unemployment and/or disability, this translates to approximately $100.7 billion worth of delinquent loans whose risk of default can be mitigated through the application of Payment Guard3. When we make lenders more resilient, we’re making capital more efficient to deploy,” she said.
“When I think about this from a macro perspective, what we’re doing with Payment Guard is we’re helping to make credit more accessible to more people because we are de-risking the entire lending value chain through insurance,” she said.
1Federal Reserve of NY, Press release, Total Household Debt Reaches $17.29 Trillion in Q3 2023; Driven by Mortgage, Credit Card, and Student Loan Balances, Nov 2023
2Federal reserve board (FRB-DQ rate support) – Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks, 2023
3Note: the remainder of the numbers mentioned in this quote are derived via calculating the output from the above-cited figures.
We want to be transparent with our valued customers. The article written about our product has been provided by an individual who received compensation for sharing their positive experience. While we believe in the authenticity of their endorsement, it’s important to note that they were remunerated for their testimonial. We appreciate your trust in our brand and strive to maintain open communication about our marketing practices. If you have any questions, feel free to reach out to us.
TruStage™ Payment Guard Insurance is underwritten by CUMIS Specialty Insurance Company, Inc. CUMIS Specialty Insurance Company, our excess and surplus lines carrier, underwrites coverages that are not available in the admitted market. Product and features may vary and not be available in all states. Certain eligibility requirements, conditions, and exclusions may apply. Please refer to the Group Policy for a full explanation of the terms. The insurance offered is not a deposit, and is not federally insured, sold or guaranteed by any financial institution.
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