DIVERSIFICATION = EXPANSION = GROWTH

 

BENEFITS OF LAUNCHING A PREMIUM FINANCE PROGRAM

Financing of insurance premiums is a natural extension of the services offered by (insurance) companies, agencies, and financial institutions.

For financial institutions, it is a logical fit within their business model and can be a sustainable option for replacing low yielding securities.

For companies and agencies, it is an effortless way to bolster revenue streams, while simultaneously offering benefits like: increased client retention and better client relationship management.

Market Potential

According to the US Department of Treasury, $500 Billion in property and casualty insurance premiums are underwritten each year.

Thirty percent (30%) of the premiums underwritten are financed. That’s a market size of $150 Billion! The surge of the U.S. Economy guarantees an increase in this number in the coming years.

Third Eye Solutions estimates that only 10% – 15% of this $150 Billion is financed by larger, national independent premium finance companies such as First Funding. The rest of the $150 Billion is financed by small and medium sized finance companies.

The Premium Finance market is an immense, mature market just waiting to be tapped into.

Risk (Or Lack There Of)

Insurance Premium Financing is a low risk financing model that has been leveraged by principals of many Agencies, MGA(s) and even regional Credit Unions.

The risk of operating a premium finance company is mitigated by the unique structure of the business model. All premium finance loans have built-in collateral, in the form of the insurance premium itself. When an insured defaults on his/her payments, finance companies simply contact the insurance carrier and collect the remainder of the loan as unearned insurance.

With the right software on-hand, tracking of payment receivables is automated. Thus, when a client defaults on a loan, notices are sent out automatically, assuring the timely collection of the unearned insurance premium.

Technological Automation

Technology has automated many of the labor-intensive functions associated with servicing a portfolio of premium finance loans. Implementation of a well-designed software solution makes the process of learning how to run your day-to-day operations quick and easy.

Today, technological automation takes care of the bulk of the business, be it the application of payments, the tracking of receivables, the dissemination of notices, the policy quoting, and more. Agents, insureds, and finance companies are all integrated through a system that streamlines workflow.

Overheads

Technological automation ensures that the cost of running a financing business remains low. Because the day-to-day management of operations is not labor-intensive, financing operations require no additional staffing. The right software solution will be priced to meet the needs of your company and will lead to almost immediate growth.

Your ongoing processes are managed entirely through your software solution, meaning that your software provider becomes your company’s extended IT arm. Servers and databases are managed remotely and, with tech-support available around-the-clock, your company can do-away with costly IT infrastructure.

Easy to Launch

Launching a Premium Finance Subsidiary involves Three (3) Key Considerations:

  1. Registering with the State and Obtaining the Licensing
  2. Arranging the Credit Facility (Funding)
  3. Establishing the Operating Framework 

With 20+ years of industry involvement and experience, Third Eye Solutions can help with each of the processes above, and provide you with the on-going support you’ll need.

Contact us to schedule a preliminary call to find out more. We are happy to share our experience!