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RANCHO CUCAMONGA, Calif. – CU Direct Corp., which administers the Credit Union Direct Lending (CUDL) program, has expanded its offering of Guaranteed Automobile Protection (GAP) coverage to members who buy new and used vehicles at CUDL-participating dealerships, through a partnership with CUNA Mutual Group. On Oct. 15, CU Direct dealer account reps went into the field signing up dealers in four states – Illinois, Hawaii, Connecticut and Colorado – for CMG’s GAP product, which supplements insurance to fully protect members from loss if a vehicle is damaged beyond repair or stolen,. CU Direct’s Mike Federoff, director of product sales, said the company intends to add Pennsylvania to that list within 30-60 days. CMG’s GAP product will supplement what CU Direct considers an almost identical product from Allstate that CU Direct has been offering to dealerships in eight of the 17 states CU Direct has relations with credit unions in – California, Washington, Minnesota, Florida, North Carolina, Virginia, Massachusetts and New Hampshire. Federoff explained the reason why the Allstate GAP product is not offered in all 17 states is because “some states’ laws are too strict about GAP or from a monetary standpoint it doesn’t make sense to do GAP business in a particular state.” He added that there is no overlap “for now” between the states that offer the Allstate product and those that will offer the CMG product, “but there could be in the future.” Federoff said CU Direct’s reason for adding the CMG GAP product to the mix was simple: “You see GAP providers pull out of certain states. We didn’t want to run into a situation where for some reason Allstate may have to leave a state or pull out of an area because of losses, and then we’d be left without having another provider.” CMG’s Tom Keeper, product manager for debt cancellation products explained that the company has been in GAP since the 1990s and established a footprint for a national GAP product a while ago, adding that CMG “is going through the process of making its proprietary GAP product available to the marketplace.” But CMG’s involvement with GAP has been on a direct basis with its credit union clients. It’s never been in the indirect market and has had no relations with the dealer community. With indirect lending continuing to increase as a share of CUs’ auto loan portfolio, CU Direct’s decision to offer CMG’s GAP product gives CMG entre into the indirect lending market. The CMG GAP product, like the Allstate product, is being sold on an indirect basis by participating dealerships to members. Pricing of the product can vary state by state since each state has its own related rules and regulations. For example, Federoff explained, some states require a set price, while others stipulate a maximum price. For those states that fall into the latter group, Federoff said CU Direct has set a maximum price of $495 they can charge. The CMG GAP product is being administered by CUMIS and is private labeled for CUDL (so is the Allstate product) – the top of the application form reads “CUDL GAP.” The cost of the coverage is disclosed as a one-time fee on the dealer’s retail installment contract and payment is included in the monthly loan fee. Members don’t have to pay separately for GAP coverage, said Federoff. CU Direct has been averaging 4,500-5,000 GAP policies a month, said Federoff, and he expects that volume to grow now that the CMG product has been added to the mix. -

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