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Revenue
 9 Months Ended
Sep. 30, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
The Company accounts for a contract with a customer when both parties have approved the contract and are committed to perform their respective obligations, each party’s rights and payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized when, or as, performance obligations are satisfied by transferring control of a promised product or service to a customer.
Revenue from contracts with lending institutions
Program fees are derived from contracts with automotive lenders. Through the Company’s proprietary LPP, the Company enables automotive lenders to make loans that are insured against certain credit losses from defaults. The Company generates program fee revenue from its proprietary, cloud-based software platform that enables automotive lenders, Original Equipment Manufacturing (“OEM”) captive finance companies and other financial institutions (collectively, “lending institutions”) to approve loans to traditionally underserved non-prime or near-prime borrowers.
The Company receives program fees for providing loan decision-making analytics solutions and automated issuance of credit default insurance with third-party insurance providers. The Company’s performance obligation is complete when a loan is certified through LPP and is issued by the lending institution. Program fee contracts contain a single performance obligation, which consists of a series of distinct services that are substantially the same with the same pattern of transfer to customers.
Program fees are based on a percentage of the initial principal amount of the loans processed by the Company. There are two types of payment arrangements: i) a single-pay program fee is due based on the volume of loans originated by the lending institution in a calendar month; or ii) a monthly-pay program fee is due in equal monthly installments within 12 months of loan origination.
The Company bills the customer for an amount calculated based on the actual number of loans processed in a calendar month, which corresponds directly with the value of service transferred to the customer in that month.
Revenue from contracts with insurance carriers
As of September 30, 2021, the Company has producer agreements with three insurance carrier partners from which the Company earns profit share revenue and claims administration service fees.
In the profit share arrangement, the Company facilitates placement of credit default insurance policies with lending institutions on behalf of the Company’s insurance partners. Profit share revenue represents the Company’s participation in the underwriting profit of the Company’s third-party insurance partners who provide lenders with credit default insurance on loans the automotive lenders make using the Company’s LPP. The Company receives a percentage of the aggregate monthly insurance underwriting profit. Monthly insurance underwriting profit is calculated as the monthly earned premium less expenses and losses (including reserves for incurred but not reported losses), with losses accrued and carried forward for future profit share calculations. The Company fulfills its performance obligation upon placement of the insurance, at which point the Company is entitled to the profit share of all future net premiums earned by the insurance carrier on the policy.
To determine the profit share revenue, the Company uses forecasts of loan-level earned premium and insurance claim payments. These forecasts are driven by the projection of loan defaults, prepayments and severity rates. These assumptions are based on the Company’s observations of the historical behavior for loans with similar risk characteristics. The assumptions also take consideration of the forecast adjustments under various macroeconomic conditions and the current mix of the underlying portfolio of the Company’s insurance partners. To the extent these assumptions change, the Company’s profit share revenue is adjusted.
In accordance with ASC 606, at the time of the placement of a policy by an insurance company, the Company estimates the variable consideration based on undiscounted expected future profit share to be received from the insurance carriers. The Company applies economic stress factors in the Company’s forecast to constrain its estimation of future profit share revenue to an amount reflecting the Company’s belief that a significant reversal in the cumulative amount of revenue is not probable of occurring when the uncertainty is resolved.
Claims administration service fees are generated from the Company acting as a third-party administrator to process and adjudicate the credit default insurance claims on behalf of the insurance companies. In this arrangement, the performance obligation to provide claims administration services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as the Company satisfies its performance obligations.
Contract Balances
Contract assets for the periods indicated below were as follows:
 Contract Assets
Profit
Share		TPA FeeProgram
Fee		Total
(in thousands)
Ending balance as of June 30, 2021$104,886 $1,099 $5,948 $111,933 
Increase of contract assets due to new business generation27,932 1,801 21,638 51,371 
Adjustment of contract assets due to estimation of revenue from performance obligations satisfied in previous periods7,515 — — 7,515 
Receivables transferred from contract assets upon billing the lending institutions— — (21,197)(21,197)
Payments received from insurance carriers(33,678)(1,682)— (35,360)
Ending balance as of September 30, 2021$106,655 $1,218 $6,389 $114,262 
 Contract Assets
Profit
Share		TPA FeeProgram
Fee		Total
(in thousands)
Ending balance as of December 31, 2020$83,177 $822 $5,343 $89,342 
Increase of contract assets due to new business generation77,605 4,854 57,146 139,605 
Adjustment of contract assets due to estimation of revenue from performance obligations satisfied in previous periods24,414 — — 24,414 
Receivables transferred from contract assets upon billing the lending institutions— — (56,100)(56,100)
Payments received from insurance carriers(78,541)(4,458)— (82,999)
Ending balance as of September 30, 2021$106,655 $1,218 $6,389 $114,262 

As of September 30, 2021 and December 31, 2020, the Company’s contract assets consisted of $60.7 million and $50.4 million, respectively, as the portion estimated to be received within one year, and $53.5 million and $39.0 million, respectively, in the non-current portion to be received beyond one year. During the three months ended September 30, 2021, the Company recorded $27.9 million in anticipated profit share, associated with 49,332 new certified loans, for an average of $566 per new certified loan, as compared to $14.7 million recorded in anticipated profit share, associated with 20,696 new certified loans, for an average of $711 per new certified loan, during the three months ended September 30, 2020. In addition, during the three months ended September 30, 2021, the Company recorded $7.5 million in estimated future profit share on business in historic periods, as compared to an increase of $3.8 million in estimated future profit share on historic vintages, during the three months ended September 30, 2020. In April 2021, the Company removed the vehicle value discount established as part of the Company’s underwriting changes implemented at the onset of COVID-19, which had the effect of increasing credit default insurance premiums and corresponding profit share during the pandemic by approximately 15% per certified loan. As a result of this underwriting change, the Company’s average profit share per certified loan decreased in the second and third quarter of 2021 and is comparable to pre-COVID-19 profit share unit economics. In addition, this change had a positive impact by increasing the Company’s closure rates on certified loans. During the nine months ended September 30, 2021, the profit share component of the Company’s contract assets increased $77.6 million in anticipated profit share associated with 129,058 new certified loans for an average of $601 per loan, and a $24.4 million positive adjustment in the contract asset related to performance obligations satisfied in previous periods as a result of the continued positive portfolio performance due to lower than projected default frequency and severity stress and overall fewer claims for loss. This positive change in estimate of $24.4 million in the first nine months of 2021 resulted in an increase in contract assets, revenue and expected future cash flows from historical vintages. The Company received $33.7 million and $78.5 million, respectively, in profit share payments from the Company’s insurance carriers, during the three and nine months ended September 30, 2021, an increase in collections over the Company’s previous quarters. The increase is primarily the result of an increase in certified loan volumes and the Company’s carriers releasing reserves established due to uncertainty related to the COVID-19 pandemic. More specifically, reserves were established to
reflect the potential for higher defaults, increased severity of defaults and accelerated prepayments. These risks have not materialized as the portfolio has performed better than expected.
Contract Costs
The fulfillment costs associated with the Company’s contracts with customers do not meet the criteria for capitalization and are expensed as incurred.
Disaggregation of Revenues
The Company disaggregates revenues by revenue source (i.e., program fee, profit share and claims administration and other service fees), and the level of disaggregation is presented in the condensed consolidated statement of operations and comprehensive income.