Rethinking CPI: A smarter way to protect portfolios and support members

When credit unions face the domino effect of uninsured collateral, it’s not just a single risk—it’s a chain reaction that when aggregated can disrupt the financial well-being of both your credit union and your members. It starts with uninsured collateral, which leads to loan delinquencies and defaults. From there, the risks ripple outward—repossessions increase, recovery costs escalate, and portfolio values and charged off losses increase. Even worse, member trust erodes, and compliance risks are exposed.

Today, that chain reaction is happening against a backdrop of heightened financial strain. Delinquencies and charge-offs have risen across nearly every loan category, now well exceeding pre-pandemic levels. Meanwhile, household budgets are stretched thin by inflationary pressures, increasing the likelihood of borrower distress.

That’s why today's financial institutions need more than just Collateral Protection Insurance (CPI). They need a comprehensive risk management approach designed to prevent problems before they begin, preserve relationships, and protect both the credit union and the communities they serve. This editorial explores how credit unions can integrate CPI with advanced technologies, regulatory strategies, optimized recovery practices and member-first practices to build a truly resilient risk framework.

CPI programs often trigger borrower frustration—especially when coverage is force-placed without adequate communication. This can result in increased loan balances, surprise charges, increased deficiency balanced liability and mounting member complaints. In today’s environment, where member loyalty is already fragile, credit unions can’t afford that level of friction.

Worse yet, regulatory scrutiny of force-placed insurance is growing. Institutions that fail to adopt more transparent and member-considerate approaches risk reputational harm, member attrition, and compliance headaches.

CPI, by nature, responds after an insurance lapse is identified—leaving a gap in protection when coverage is needed most. In a market where loan growth is slowing and asset quality ratios are beginning to show strain, proactive management is no longer optional. A risk strategy built on real-time data, AI-powered tracking, and automated borrower engagement that meets the member where they are and how they like to be met are paramount. Programs that allow for prevention of coverage lapses before they happen, rather than reacting afterward.

CPI addresses one specific risk—uninsured collateral. But credit unions today face an interconnected web of challenges: rising fraud, increased and de-centralized repossessions, compliance violations, and increased operational costs. Treating CPI as the sole defense leaves institutions vulnerable to broader risks that can undermine portfolio health and liquidity.

A forward-thinking risk approach combines CPI with additional safeguards, such as:

According to Callahan’s State of the Credit Union Industry, credit unions reported a 4.3% increase in share balances in 2024, there's now a renewed opportunity to reinvest in portfolio protection strategies that stabilize long-term performance—not just chase short-term loan growth.

A modern CPI program must support—not complicate—regulatory compliance. The right partners provide compliant CPI structures approved in all 50 states, clear disclosures, and automated documentation. Look for solutions that integrate:

These features help institutions avoid unnecessary placements, reduce audit exposure, and support regulatory peace of mind—especially critical as regulatory scrutiny increases around force-placed practices.

A holistic approach also improves efficiency. When real-time data and automation are in place, credit unions can eliminate manual processes, minimize human error, and respond faster to risk signals.

The result? Stronger portfolios, fewer charge-offs, and more members kept in their vehicles—without sacrificing internal resources. As member lending delinquencies continue to climb, preventing losses before they hit the balance sheet is critical to maintaining liquidity and capital strength.

In a robust risk strategy, repossession should be the last step—not the default. Credit unions should explore options like pre-skip services, voluntary insurance claims, and advanced recovery tools that prioritize borrower retention. These methods increase recoveries while preserving relationships, protecting both financial outcomes and member loyalty during difficult times.

Not all CPI programs are created equal. As you evaluate options, look for:

You want a partner who helps you build a risk strategy—not just plug in a product. The most effective CPI providers aren’t just selling insurance; they’re delivering a framework for protection, performance, and progress.

As risks evolve and borrower expectations rise, CPI can no longer operate as a standalone safeguard. Credit unions need integrated risk management strategies that anticipate issues before they arise, protect assets without creating friction, and strengthen trust through transparent practices.

With the right layers in place—from CPI and compliance support to fraud prevention and member engagement—credit unions can turn risk into resilience, ensuring a healthier future for their portfolios and the people they serve. Now more than ever, preparing for uncertainty with a proactive, member-first risk strategy is the key to sustainable success.