• Premium Finance Solutions

     

    Premium Finance Solutions are a way to fund your insurance policies. However, there are some risks and costs involved. This article outlines these risks and costs, as well as the various platforms available for premium financing. In addition, you'll learn more about the benefits of premium financing. After reading this article, you'll be able to make a wise decision when it comes to premium financing.

     

    Benefits

     

    Premium Finance Solutions are a great option for those who do not have the capital to pay their premiums upfront. Premium finance is a type of loan where the finance company and agent work together. The process is easy to follow because of the integration between the insurer and agent. You can quickly learn the ins and outs of the process with a well-designed software solution.

     

    Premium financing allows insureds to access low-cost capital that allows them to better manage cash flow and invest in operational capital. This type of financing leverages the unearned portion of the insurance policy as collateral.

     

    Risks

     

    While premium finance solutions have a host of benefits, they also carry some risk. Premium finance agreements generally have variable interest rates and can require clients to provide more collateral and more money than originally planned. While premium finance is a complex process, it offers incredible benefits for the right client. If you are considering premium financing, it is best to work with an experienced team of advisers.

     

    Premium finance arrangements require the lenders to report any suspicious activity, including cash refunds, and any other indicators that could indicate possible money laundering or terrorist financing. As a result, it is essential to review all risks involved in a premium finance arrangement to determine if this strategy is right for you.

     

    Costs

     

    The COST program gives insurance agents the power to start their own premium finance company. This allows agents to earn more revenue than traditional commission programs. Agents earn fees from premium financing as well as late fees and finance charges. Klingler recommends that agencies earn at least $1 million in annual premium financing to benefit from the COST program. Agents earn a commission of 30 to 40 percent. Those who aren't as enthusiastic about the COST program should consider other premium finance options.

     

    The COST process has evolved over the last 30 years as it has met the needs of different insurance clients. This allows COST to offer flexible solutions that fit into existing workflows. This flexibility is important during times of crisis and recovery.

     

    Platforms available for premium financing

     

    There are several premium finance platforms available in the market. Some of them include Input 1, which has a traditional model for premium financing. Others include Bank of America Corporation, Citigroup Inc. and MGAs, as well as independent firms. Regardless of which option you choose, there are several things to keep in mind when choosing a premium financing platform.

     

    First, the premium finance platform you choose should be a carrier-approved program. If the program is non-carrier-endorsed, it may require hefty upfront fees. Most advisers prefer premium finance platforms to reduce their overall risk and avoid making large upfront payments to insurance companies. Moreover, these platforms allow you to attach more than one insurance policy to a single premium finance contract. In this way, you can get the complete coverage of your insurance coverage.