Lenders Q & A

​

Section A - About MIG, BMI & LMHI

​

Q1.  What is Mortgage Insurances Group (MIG) and what is your relationship to our institution?

A:  MIG is a specialist insurance intermediary and Managing General Agent (MGA). We design, distribute and administer two purpose-built general insurance products for the Australian mortgage market; Borrowers Mortgage Insurance (BMI) and Lenders Monitored Home Insurance (LMHI). Our role is to integrate with your loan origination and servicing environment so these products can be offered to your borrowers at the point of loan origination, and monitored through the life of the loan, on a referral or embedded-distribution basis not to compete with your core lending business.

 

Q2.  What is BMI, in one sentence?

A:  BMI is a non-recourse general insurance policy that sits alongside a home loan, covering up to six months of scheduled loan repayments during qualifying unemployment or health/incapacity events, with a shortfall protection benefit and, unlike LMI, no right of subrogation against the borrower.

 

Q3.  What is LMHI, in one sentence?

A:  LMHI is a bundled house and contents insurance policy, paid periodically alongside BMI, that gives lenders for the first time real-time, portfolio-wide visibility of which borrowers are maintaining the mandatory home insurance required under their loan covenants.

 

Q4.  How is BMI different from traditional Lenders Mortgage Insurance (LMI)?

See comparison table below the core distinction is that BMI is a co-insurance structure benefiting both borrower and lender, whereas LMI benefits the lender only and is fully recourse against the borrower.

 

Lenders Mortgage Insurance (LMI)

Borrowers Mortgage Insurance (BMI)

Policy owned by, and benefits, the lender only

Non-recourse policy for the benefit of both borrower and lender

Only the lender can claim

Both the insured borrower and the lender can claim

Full recourse — insurer recovers any payout from the borrower

No recourse against the borrower

Typically mandated above 80% LVR

Not limited to loans above 80% LVR applicable across the LVR spectrum

Premium circa 5%+ of loan amount, paid upfront

Premium circa 2% of loan amount

No borrower repayment protection benefit

Up to 6 months of repayment cover for unemployment / illness, plus additional benefits

 

Q5.  Why would our institution want to offer BMI and/or LMHI alongside, or in place of, LMI?

Potential capital adequacy benefits mortgage insurance generally reduces a lender's risk-weighted exposure and can support access to lower-priced wholesale funding.

• A genuine point of product differentiation BMI is positioned as an Australian and world-first innovation, giving your front line a distinctive affordability and protection story.

• Lower repayment-shortfall and hardship-related costs, because BMI's repayment cover activates before a loan reaches default.

• LMHI closes a growing blind spot in your loan book underinsurance and non-insurance of mortgaged property that current settlement-time Certificate of Currency checks do not address.

• Optionality to pass on a rate benefit to borrowers who voluntarily take BMI, supporting origination volumes at lower LVR bands.

 

Q6.  What is MIG's business model do you compete with us for the customer relationship?

A:  No. MIG operates as a product manufacturer and distributor working through lenders and brokers; we do not originate loans and are not seeking to disintermediate your customer relationship. Our platform including any AI-assisted call handling described in Section G is built to support your existing servicing relationship with the borrower, not replace it.

 

Section B - Commercial & Distribution

​

Q7.  How does BMI get distributed to our customers?

A:  BMI and LMHI are designed to be offered at the point of loan origination either as a broker/lender-initiated conversation for borrowers below 80% LVR seeking repayment protection, or bundled into the settlement process. Distribution mechanics (referral, embedded/white-label, or co-branded) are agreed individually with each lender partner and are a key discussion point in onboarding.

 

Q8.  What does it cost our institution to offer BMI and LMHI to our customers?

A:  There is no product cost to your institution the premium is paid by the borrower. Where a referral or distribution arrangement is agreed, MIG pays a distribution/referral fee to the originating lender or broker channel, structured to comply with ASIC's conflicted remuneration and deferred sales model requirements. Specific commission terms are agreed under a distribution agreement, not disclosed generically.

 

Q9.  Is there a commercial benefit to us beyond risk mitigation?

A:  Yes. Beyond the capital and hardship-cost benefits noted above, lender partners can receive a referral/distribution fee on BMI and LMHI business originated through their channel, and through LMHI a portfolio insurance-monitoring subscription service that would otherwise be costly or impractical for a lender to build in-house.

 

Q10.  Can we offer a discounted interest rate to borrowers who take up BMI?

A:  Yes this is entirely at each lender's discretion. Because BMI reduces the risk profile of a loan, some lenders may choose to offer a modest rate discount to borrowers who voluntarily take BMI (for example, a standard 5.5% rate reduced to circa 5% for loans at 80% LVR or less supported by BMI). This is a commercial decision for your institution, not a feature MIG mandates.

 

Q11.  How is BMI priced?

A:  Indicative BMI premiums sit at circa 2% of the loan amount, materially below typical LMI pricing (circa 5%+). Premiums on LVRs of 80% or less may be paid monthly in advance; for LVRs above 80%, the first 12 months are paid upfront (and may be capitalised into the loan) with monthly payments in advance thereafter. Final premium tables are calibrated against RBA cash rate settings and Roy Morgan mortgage stress data and will be confirmed with each underwriting partner as part of the binding authority.

 

Q12.  Can we co-brand or white-label BMI and LMHI under our own brand?

A:  Co-branding and white-label options are part of the distribution discussion during onboarding. The extent to which BMI and LMHI can carry your brand alongside MIG's and alongside our underwriter's requirements will depend on the AFSL and underwriting arrangements in place at the time, and is confirmed individually with each lender partner.

​

Section C - Regulatory & Underwriting Status

​

Q13.  Who is the underwriter for BMI and LMHI?

A:  MIG's preferred underwriting pathway is Lloyd's of London, accessed via an Australian coverholder / binding authority arrangement, and MIG is in active discussions with Lloyd's Australia toward this outcome. No underwriter has yet been formally confirmed or contracted [pending]. We will not name an underwriting partner to lender clients until a binding authority is executed.

 

Q14.  Does MIG hold an Australian Financial Services Licence (AFSL)?

A:  Not yet. MIG's Phase 1 strategy is to operate as an Authorised Representative under a rented AFSL arrangement being sourced by King Irving, ahead of Phase 2 MIG securing its own AFSL. This staged approach is standard practice for a new MGA entering the Australian insurance distribution market and will be clearly disclosed in all product disclosure documents [pending finalisation].

 

Q15.  What regulatory framework governs BMI and LMHI?

A:  BMI and LMHI are being developed as general insurance products, distributed in compliance with the Corporations Act 2001 (Cth) Part 7.9, ASIC Regulatory Guide 168 (PDS requirements) and RG 246 (conflicted remuneration), and the Insurance Contracts Act 1984 (Cth). BMI operates alongside not in replacement of the statutory hardship provisions under the National Consumer Credit Protection Act 2010.

 

Q16.  Is BMI a financial guarantee insurance product like LMI, or something else?

A:  MIG's regulatory position, put to APRA and Treasury, is that BMI should be characterised as general insurance rather than financial guarantee insurance (the class LMI falls under). This distinction matters because it affects which underwriting markets including Lloyd's syndicates can write the risk. This characterisation is a live regulatory engagement, not yet formally confirmed by APRA [pending].

 

Q17.  What stage is MIG at in bringing BMI and LMHI to market?

A:  MIG is in the pre-launch development phase: product design, PDS/policy wording, AFSL pathway, underwriting capacity (Lloyd's), platform/vendor selection (including AI-assisted servicing) are all in progress in parallel. We are engaging selected lender partners now so that distribution relationships and system integration can be ready to move quickly once the AFSL and underwriting arrangements are finalised.

​

Q18.  What happens to our distribution agreement if MIG's AFSL or underwriting arrangements change before launch?

A:  Distribution agreements will include standard conditions precedent and review rights tied to confirmation of MIG's AFSL and underwriting capacity. Lender partners will not be asked to go live with borrower-facing distribution until those foundational regulatory approvals are in place.

​

Section D - BMI Product Mechanics for Lenders

​

Q19.  What LVR bands does BMI apply to?

 

A:  Unlike LMI, BMI is not restricted to loans above 80% LVR it is designed to be available across the LVR spectrum, giving lenders a consistent product to offer regardless of deposit size.

 

Q20.  How are premiums collected does MIG or the lender administer this?

A:  Premium collection is designed to run through MIG's policy administration and payment infrastructure, with automated payment reminders and default flagging to customers (see Section G on AI-assisted servicing), minimising administrative burden on lender servicing teams. Integration options (direct debit via MIG, or loan-account-linked collection) are agreed during onboarding.

 

Q21.  What happens when a borrower makes a claim?

A:  Because BMI is a co-insurance structure, either the borrower or the lender can initiate a claim. Repayment assistance cover (unemployment or health/incapacity) pays scheduled repayments directly to the lender for up to six months, subject to a qualifying waiting period. In the case of a shortfall claim, the co-insurance and non-recourse structure means the lender is protected without creating a debt-recovery position against the borrower removing a source of reputational and hardship-related friction for your collections team.

 

Q22.  Does BMI replace our obligations under the National Consumer Credit Protection Act hardship provisions?

A:  No. BMI operates alongside statutory hardship arrangements under the National Consumer Credit Protection Act 2010 it is a complementary insurance benefit, not a substitute for your existing hardship obligations and processes.

 

Q23.  Does BMI reduce our capital requirements under APRA prudential standards?

A:  This is one of the core value propositions under active development and regulatory engagement mortgage insurance generally supports more favourable risk-weighting treatment under APRA's ADI capital framework. The precise capital treatment for BMI specifically will depend on final APRA characterisation of the product and is not yet formally confirmed [pending]. We are happy to walk your risk/treasury team through the current regulatory positioning.

 

Q24.  Can our staff view a borrower's BMI/LMHI policy status directly, rather than waiting for the monthly report?

A:  The primary channel is the LMHI monthly portfolio report described in Section E. A real-time look-up capability for authorised lender staff is a feature under consideration for the platform build and will be confirmed during technical scoping.

​

Section E LMHI - Portfolio Monitoring & Reporting for Lenders

​

Q25.  How does LMHI address home-insurance risk in our loan book?

A:  Most loan agreements require borrowers to maintain home insurance at all times, evidenced by a Certificate of Currency at settlement but very few lenders have the administrative capacity to check ongoing compliance. Industry data indicates more than 30% of borrowers fall into breach of this covenant at some point. LMHI closes that gap: it is a competitively priced, monthly-in-advance policy bundled with BMI, with MIG's payment system reminding customers of upcoming payments and red-flagging any defaults or lapses.

 

Q26.  What does the lender reporting / dashboard look like?

A:  Lender partners receive a subscription-based monthly report covering all loans insured through MIG giving, for the first time, an accurate and current view of insurance status across the portfolio. This identifies slow-paying or defaulting borrowers and provides line-of-sight for your Chief Risk Officer into potential problem exposures and real-time insurance-risk visibility across the book.

 

Q27.  How prevalent is underinsurance really why should we care?

 

• Independent reporting (Actuaries Institute, August 2024) estimated around 180,000 households were experiencing home insurance affordability stress, representing roughly $57 billion in outstanding loan balances about 3% of all home loan assets nationally.

• The Australia Institute (May 2025) estimated mortgages on underinsured and uninsured owner-occupied properties together total nearly $119 billion.

• ABC News (December 2024) reported close to 200,000 households were either already breaching, or at risk of breaching, their mortgage insurance covenants due to surging home insurance costs.

A:  This is a growing, largely invisible risk to the security underpinning your loan book and may also affect the value of loan-book securitisation where insurance status cannot be evidenced.

 

Q28.  Does LMHI cover the property itself, or just alert us to a problem?

A:  Both. LMHI is a genuine house and contents insurance policy covering the property it is not merely a monitoring service. The monitoring and reporting capability is a by-product of MIG administering the policy directly, which is what allows us to see payment and lapse behaviour that a standard third-party-insured policy would never reveal to the lender.

 

Section F - SMSF & LRBA Lending

​

Q29.  Following the ban on new residential SMSF LRBAs, is BMI still relevant to our SMSF lending book?

A:  Yes. Following the Royal Assent (26 June 2026) of legislation banning new residential SMSF Limited Recourse Borrowing Arrangements, MIG's SMSF strategy has been repositioned around two segments that remain live: the grandfathered cohort of existing residential SMSF LRBAs (estimated 70,000–80,000 funds) and commercial-property LRBAs, which remain permitted and represent a larger long-term market (circa $14.5 billion in debt stock). BMI is designed to be available to both.

 

Q30.  Can SMSF trustees pay BMI premiums from their superannuation fund?

A:  This is a designed feature of MIG's SMSF pathway direct payment of BMI premiums from the fund and is the subject of a Private Binding Ruling (PBR) application currently before the ATO regarding tax treatment under the SIS Act [pending ATO ruling]. We will confirm this pathway to lender partners once the ruling is received however our own legal advice is that it fully complies and can be paid by a SDMSF Trustee. The PBR is merely ensuring it.

​

Section G  - AI-Assisted Servicing & Call Handling      

    

MIG is evaluating an AI voice, chat and SMS platform (Phonely) to handle a substantial share of routine call-centre activity in place of a fully manned call centre. This vendor relationship is under active evaluation and has not been contracted, configured or deployed the questions below describe the intended design, not a live service.

 

Q31.  Why is MIG evaluating AI voice technology instead of a traditional manned call centre?

A:  At national scale, a manned call centre is one of the largest fixed costs in running an insurance servicing operation, and borrowers typically only reach it during business hours. AI voice platforms such as Phonely are designed to answer routine calls instantly, 24 hours a day, at a fraction of the per-call cost of a traditional call centre freeing MIG's human specialists to focus on claims, hardship and more complex servicing rather than routine administrative queries. Phonely is able to handle in excess of 10,000 phone enquires per day 24/7

 

Q32.  What is Phonely, specifically, and what would it do for MIG and our joint borrowers?

A:  Phonely is a third-party AI agent platform that answers calls (and handles chat and SMS) using natural-sounding conversational AI, with prebuilt integrations to CRM, calendar and workflow systems, and detailed call analytics (volumes, sentiment, resolution rates). If adopted, MIG's intended use is to have Phonely answer everyday policy administration calls payment status, certificate of currency requests, detail updates, general product questions and place outbound reminder calls for LMHI and BMI payments.

 

Q33.  Will our borrowers always end up speaking to a human, or could an entire call be handled by AI?

A:  Routine calls payment status, general questions, booking a callback may be resolved entirely by the AI agent. Any call involving a claim, hardship indicator, vulnerability, dispute, or a borrower request to speak to a person is designed to escalate immediately to a MIG staff member. The AI is not intended to make claims decisions or manage hardship conversations end-to-end.

 

Q34.  Does the AI agent make outbound calls too for example, LMHI payment reminders or lapse follow-up?

A:  Yes, this is one of the intended uses. Outbound reminder calls and SMS ahead of a due payment, and prompt follow-up where a payment is missed or a policy lapses, are designed to feed directly into the LMHI lender reporting described in Section E helping catch a lapse before it becomes a bigger problem for you or the borrower.

​

Q35.  How would the AI voice platform integrate with our loan servicing or CRM systems?

A:  Phonely is built around prebuilt API and workflow integrations to common CRM, calendar and business systems. Any specific integration between Phonely and your loan origination or servicing platform would be scoped individually as part of onboarding and would be subject to your own data-sharing and security approval processes MIG would not connect a third-party AI platform directly to your systems without your agreement.

 

Q36.  What happens when the AI can't resolve a call how does escalation to a person work?

A:  Escalation triggers a borrower request to speak to a person, an unresolved query, or any indication of a claim, hardship or vulnerability are designed to be built into the call configuration itself, rather than left to the AI's discretion. These triggers, and the resulting handover to MIG staff, will be tested and validated before any live use.

 

Q37.  Is an AI call-handling platform compliant with Australian privacy law, given Phonely is an offshore vendor?

A:  This is a specific and active part of MIG's vendor due diligence. Phonely publishes SOC 2, GDPR, CCPA, HIPAA and PCI-DSS compliance credentials, which are a reasonable baseline, but Australian Privacy Act 1988 compliance in particular Australian Privacy Principle 8 (cross-border disclosure of personal information) and data residency requires its own separate assessment and contractual protections. MIG will not use Phonely (or any AI vendor) for live borrower calls until this assessment and any required contractual safeguards are complete [pending].

 

Q38.  Where would call data (recordings and transcripts) be stored, and for how long?

A:  Storage location and retention periods are being worked through as part of the vendor agreement and will be disclosed in MIG's Privacy Policy before the platform is used for any live borrower or lender-facing call. This is one of the specific items under review given Phonely's infrastructure is not Australia-based by default.

 

Q39.  Can the AI agent appropriately identify and handle a hardship or financial vulnerability disclosure?

A:  The design intent is that any hardship, vulnerability or distress indicator triggers immediate escalation to a trained MIG staff member rather than being handled by the AI consistent with ASIC and industry expectations for the fair treatment of vulnerable customers. This escalation logic will be specifically tested before go-live, and MIG does not intend to rely on the AI agent for hardship conversations of any kind.

​

Q40.  What cost savings does this create, and does it change your commercial terms with us?

A:  Published industry benchmarks for platforms like Phonely point to material reductions in per-call handling cost and much faster response times compared with a traditional manned call centre. Any efficiency gain supports MIG's ability to sustain competitive pricing and distribution/referral fee arrangements over time, but does not itself change the underwriting terms or premium structure of BMI or LMHI.

 

Q41.  Does using an AI agent change MIG's AFSL or Authorised Representative obligations for these calls?

A:  No. Regardless of whether a call is handled by a person or an AI agent, it must be conducted within MIG's AFSL/Authorised Representative authorisations and disclosure obligations. Building this constraint into the AI agent's scripts and configuration in consultation with King Irving is a specific requirement of the implementation, not an afterthought.

 

Q42.  Would we get reporting on calls affecting our borrowers sentiment, resolution rates, volumes?

A:  Phonely's platform provides call analytics including sentiment, completed-task rates and volume trends. Where relevant to your portfolio, a version of this reporting could be incorporated into the LMHI lender dashboard described in Section E, subject to a data-sharing agreement between MIG and your institution.

 

Q43.  Are complex claims calls handled by the AI agent?

A:  No. Any call involving a claim of meaningful complexity, or a decision about entitlement to a payment, is designed to route to a MIG claims specialist. The AI agent's role is confined to routine administration, general information, reminders and initial triage not claims assessment.

 

Q44.  Does the platform support borrowers who don't speak English as a first language?

A:  Phonely supports a very large number of languages, which may help MIG serve culturally and linguistically diverse borrower communities more effectively than a traditional English-first call centre. Specific language configuration would be finalised as part of implementation, informed by the language profile of each lender partner's borrower base.

 

Q45.  What happens if the AI platform has an outage will borrowers be left without a way to contact MIG?

A:  Business continuity and fallback arrangements such as diversion to a live queue, callback capture, or a published direct-dial alternative are a standard requirement of any vendor contract MIG enters into for call handling, and will be documented in MIG's operational risk framework before go-live.

​

Section H - Onboarding, Integration & Data

​

Q46.  How does BMI/LMHI integrate with our loan origination system (LOS)?

A:  MIG's platform is being built on an API-first architecture designed to integrate with lender LOS and servicing platforms, minimising manual handling at origination and throughout the loan lifecycle. Integration approach and technical scope are confirmed during a joint discovery session as part of onboarding.

 

Q47.  What data does MIG require from us, and how is privacy handled?

A:  Data requirements are limited to what is necessary to originate and administer the policy (loan, property and borrower details relevant to underwriting) and to produce the LMHI portfolio report. All data handling is designed to comply with the Australian Privacy Act 1988 and the Australian Privacy Principles (APPs), including APP 8 (cross-border disclosure) where any offshore processing or vendor is involved including Phonely, if and when it is adopted and this is assessed and documented for every vendor in MIG's platform architecture.

 

Q48.  What's the onboarding process and timeframe for a lender partner?

 

• Initial discussion and mutual NDA.

• Commercial term sheet distribution model, referral fee structure, and any co-branding.

• Technical discovery integration scope with your LOS/servicing platform, and any AI-assisted servicing touchpoints relevant to your borrowers.

• Compliance review disclosure documents, remuneration disclosure, and joint marketing material sign-off.

• Pilot / phased rollout ahead of full launch.

A:  Given BMI and LMHI are pre-launch, timing for a lender partner going live is tied to finalisation of MIG's AFSL pathway, underwriting capacity, and any AI vendor arrangements we will provide a firm timeline once those milestones are confirmed.

 

Q49.  Who do we contact to start a conversation?

A:  Please contact Noel Langdon, Founder and Executive Chair, Mortgage Insurances Group Pty Ltd, at nlangdon@borrowersmortgageinsurance.com.au, or via www.borrowersmortgageinsurance.com.au. We are happy to provide a detailed information pack tailored to your institution.