Why Credit Unions Should Keep Forms & Insurance Separate

In 2016, the net premium written by the U.S. credit insurance industry amounted to approximately 1.1 billion U.S. dollars. Now that’s a lot of money. How many of those dollars were actually used to subsidize the cost of your forms?

Let’s be real about the situation. In many cases (perhaps even a majority-plus), you might be offered what may appear as a “bargain” for your forms when bundled with you offering their insurance to your members. It’s likely you’ll find those very same forms unavailable without the insurance. Why? Because often the insurance premiums you’re collecting on behalf of the carrier are being used to offset the cost of the forms.

The interest(s) of due diligence should scream at you in such circumstances, as proper analysis of cost-benefit is mission critical (and, quite frankly, a requirement). A proper forms system includes such elements as a strong emphasis on:

• Adherence to both state and federal laws and regulations;
• Representing and conforming to your ever-changing internal policies and procedures;
• Working hand-in-hand with the multitude of technology/IT systems in use at your credit union;
• Providing data services so that all your forms are automatically populated with data from your system(s); and
• Respecting UDAAP by making it 100% clear what transaction is taking place, rather than leading with and being overwhelmed primarily by an insurance purchase.

At the end of the day, it remains all about your members. So, if they had a hand in making the decision, what would they choose? Forms provided by a company specifically dedicated to forms and nothing else? Or, forms provided solely in conjunction with and subsidized by the insurance dollar, perhaps even lessening the important emphasis on:

• Compliance;
• Internal policies and procedures;
• Technology/systems integration;
• Forms and only forms (and not insurance); and
• Transparency with your members.

Putting this theory to the test is simple: Request the insurance carrier that you chose to sponsor the cost of forms not provided by them, and see what happens next … it’ll likely be an entertaining exercise.

Insurance is a great way for credit unions to add noninterest income to the books. But it is not always good for credit union forms. Let’s dive a little deeper into this with an example from Apple.

The iPhone is considered the top dog when it comes to smartphones in today’s technologically-advanced world. But let me ask you this: Have you ever used Apple maps?

Apple Maps will (at least, a majority of the time) direct you to your correct destination. But, have you ever been en route and then unexpectedly advised by Siri to make a U-turn out of nowhere, leading you to drive aimlessly in circles? Or, how about anticipating arriving at your destination at 7 p.m., only to be surprised that the trip actually took an extra 45 minutes? If you have ever used Apple Maps, I am sure you have a story of your own similar to this.

The explanation for this? Apple invests a majority of its resources improving its core product. They spend a great deal of time developing new innovative ideas for the next generation of iPhones. This is what Apple is great at, and the reason why it remains at the top of its industry. However, in comparison to a dedicated map app such as Goggle Maps, how much time is dedicated to developing and innovating the app for Apple Maps?

You may find a better user experience when using a different navigation app such as Google Maps. Google is known for providing software solutions that make our lives easier, leading us to choose them more often than not. Google’s resources are spent on developing its programs and software.

This idea is similar to credit union insurance and forms. At the end of the day, they are an insurance company. When it comes to forms, compliance may fall through the cracks.

So, forms are not just forms, rather, they are an extension of the uniqueness of your credit union. They scream your credit union’s brand and name, all while being backed up by a time-tested and true company dedicated to forms and only forms. Leave credit union forms to the experts, and insurance to the insurance companies.

Also, amortizing the cost over time, just as with any other system in place at your credit union, will almost always end up costing the same, or in many cases, less!

Richard Gallagher is CEO of Oak Tree Business Systems, Inc. He can be reached at 800-537-9598 or clientservices@oaktreebiz.com.