Transforming loan cover insurance: how technology is revolutionising a critical business process for NBFCs

By Vishwa Nigam, EVP-Growth, Nvest Solution 

Loan cover insurance is a critical component for both lenders and borrowers in the financial ecosystem. It provides an essential safety net, ensuring that a borrower’s loan is covered in the event of unforeseen circumstances, and giving the lender the security of a protected asset. However, for many large Non-Banking Financial Companies (NBFCs) operating across multiple lending verticals, the process of securing this insurance has traditionally been fraught with inefficiencies.

The conventional, offline model is a significant bottleneck. It relies on lenders sending customer details—such as loan amount, tenure, and personal information—to insurance companies in static formats like Excel sheets. This manual approach is not only resource-intensive but also prone to errors and delays. A significant amount of back-and-forth communication is required between the lender and insurer to ensure data accuracy before an insurance certificate is issued. This entire process can take anywhere from T+2 to T+3 days, creating unnecessary risk for both the lender and the borrower during this crucial period.

This is where digital transformation offers a powerful solution. By moving from a cumbersome offline model to a completely digital, real-time process, NBFCs can unlock speed, efficiency, and a superior customer experience.

The Power of a Vertical-Specific, Real-Time Solution

At Nvest, we have developed a unique solution that not only solves the problem of offline processing but also addresses the complexities faced by NBFCs with diverse lending portfolios. Our platform facilitates a complete transition to a real-time digital process, eliminating the reliance on manual data transfers and protracted communication loops.

A core feature of our offering is the Product Configurator, designed specifically for large NBFCs operating in multiple verticals such as housing finance, vehicle finance, MSME loans, gold loans, and unsecured personal loans. Every lending vertical has its own set of unique requirements and nuances that traditional, one-size-fits-all solutions cannot accommodate.

Our Product Configurator allows NBFCs to set up and manage these vertical-specific requirements at a granular level. For example:

• In some loan products, a co-applicant cover may be essential, and the system needs to be flexible enough to handle two, three, or more applicants.
• Certain loans may require a moratorium period to be considered in the insurance policy.
• The system must be capable of handling the different tenures associated with a wide range of loan products.

By allowing NBFCs to configure a loan cover insurance variant tailored to the specific needs of each vertical, our solution provides the flexibility and control required to manage a diverse business portfolio seamlessly.

The Impact: Expedited Processes and Enhanced Trust

Our unique offering delivers tangible benefits that go beyond simply speeding up a process. By providing a digital backbone, we have not only expedited the issuance of Certificates of Insurance (COIs) to a real-time basis but have also empowered NBFCs with the necessary views and controls to manage their business across multiple verticals and locations.

The result is a paradigm shift in how NBFCs operate and interact with their customers. Partners who have adopted our solution have seen:

• Enhanced customer trust through a smooth and professional onboarding process.
• Increased operational efficiency by eliminating manual work and delays.
• New revenue opportunities through the ability to easily cross-sell other contextual insurance products that meet their customers’ requirements.

By embracing a digital-first approach to loan cover insurance, large NBFCs can transform a once-cumbersome process into a competitive advantage. It’s a step towards a more secure, efficient, and customer-centric future for the lending industry.