We commonly observe that many lenders unknowingly impose prohibitive insurance requirements on their borrowers to safeguard their interests. Although well-intentioned, these demands are often not in line with market standards, can be costly to fulfil, or may not align with the unique requirements of the project. Corporate Protection Group works with lenders to become more competitive without assuming additional risk.
Scope of Work
- Insurance standards gap analysis
- Borrow review and negotiations
- Premium and exposure assessment
- Replacement cost validation
- Compliance monitoring
Background: A real estate lender became increasingly frustrated with the time-consuming negotiations and delays in loan closings that frequently accompanied their borrower insurance reviews. They were particularly concerned about the resistance they encountered regarding insurance terms, fearing that the requirements they were requesting might not align with market standards.
Solution: During our initial engagement, our team conducted a comprehensive review of all investor and fund compliance documents to identify any obligations that the lender needed to fulfil. As part of this process, we thoroughly examined the insurance requirements imposed on borrowers and discovered that these requirements not only deviated from market standards but also violated the lender’s own investor agreements. To address these issues, we collaborated on establishing a new base form lender agreement that fully adhered to the standards set by their investors. This updated agreement not only ensured compliance but also had a significant impact on minimizing the pushback encountered from borrowers.
Outcome: The establishment of the new base form agreement had an immediate impact on enhancing insurance negotiations. Not only did the team gain assurance that they were fully compliant with their investors, but they also realized tangible savings as the ongoing insurance review fees were significantly reduced. This reduction in fees was a direct result of the improved review process, which became more efficient and effective.
Benefits to our clients
Reduce Borrower Push-back
Enhance client relationships and streamline insurance negotiations by providing borrowers with terms that align with market standards.
Expedite Loan Closing
Examine and improve the insurance review process to reduce the risk of any closing delays resulting from borrower insurance negotiations.
Protect Investor Capital
Safeguard the financial interests of you and your investors by implementing insurance requirements that align with the distinctive characteristics of your project.
Be More Competitive
Differentiate yourself from other lenders and establish a reputation as the preferred choice for prospective borrowers.