Genworth Mortgage Insurance Australia has been told to submit a new proposal to the Commonwealth Bank ahead of the expiry of its exclusive Lenders Mortgage Insurance (LMI) supply agreement, which is worth around $320 million a year.

Shares in Genworth plunged as much as 17% to eight-month lows on the news that the bank – its biggest customer – is not automatically rolling the agreement over.

The Commonwealth Bank contract, which made up 57% of Genworth’s $561.7 million gross written premium (GWP) last year, has been held by Genworth since 2006. The current three-year agreement expires at the end of next year.

NAB ended its LMI relationship – worth around 12% of Genworth’s GWP – in November, moving to an exclusive deal with QBE. Westpac stopped doing business with Genworth in 2015.

A QBE spokeswoman declined to tell insuranceNEWS.com.au whether QBE plans to submit its own LMI proposal to CBA.

Genworth CEO Pauline Blight-Johnston says working with customers to improve the efficiency and competitiveness of its cover and "reimagine LMI for a new generation of home buyer” is a core activity of her company.

“We welcome the opportunity to submit a proposal to CBA to extend our agreement for the supply of LMI beyond 2022, building on the strong foundations of our long-standing relationship,” she said.

Genworth services more than 50 lenders in Australia and renewed seven on an exclusive basis in the past year, including a non-major bank and six mutual lenders, for periods of three to five years.