Why the best premium financing solutions evolve with the needs of agencies

Despite a turbulent year, agents can thrive with the help of a leading provider

Why the best premium financing solutions evolve with the needs of agencies

Insurance News

By Alicja Grzadkowska

Businesses in the US have had their hands full managing the pandemic, including insurance agencies, who have been on the front lines of supporting commercial insureds through a difficult year. However, amid the upheaval brought on by COVID-19, agents were able to turn to premium financing options to provide much needed assistance for their clients.

One leader in the premium financing in particular aimed to help agencies over the course of 2020, and in turn demonstrated the broader value proposition that it can offer agents in the long-term.

“What we’ve tried to do is be responsive,” said Chris Gebhardt, chief technology officer at COST Financial Group. “A big focus for us in 2020 was making sure that our clients were compliant in all the states that we operate in and across all the companies that we manage … We had to make sure that our clients and the financing that they were doing, and the procedures that we were using for things like cancellations and waiving of fees [were compliant with] all of the different state rules and regulations.”

The COST team didn’t want financing compliance to become a burden for its agency clients, alongside the many other hurdles they were having to overcome during a turbulent year, so COST took on the responsibility of ensuring that agencies’ premium finance companies were following the rules.

In the meantime, COST has also introduced new features to make implementing its premium financing solutions that much easier for insurance agencies. Already, the provider focuses on empowering agents to start their own finance company and capture revenue that would otherwise be going to traditional premium finance lenders. These lenders tend to offer agents revenues via standard commission programs, however even the best commission programs in the industry pale in comparison to the revenue generated by agent-owned premium finance companies.

Now, COST has made the process of setting up and running a premium finance company even simpler and more streamlined.

“We have utilized APIs that integrate with various client agency systems, so it essentially becomes a one-button process to generate a finance agreement, and we have a single sign-on solution for people who want to take their premium finance company to a different level from a marketing perspective and also tie it into an internal agency system,” explained Gebhardt. “We continue to try and integrate as much as we can with what agencies are looking to do and be responsive to what our clients need.”

COST likewise helps agents who want to open up their finance company to other agencies. Oftentimes, an agent who owns their own business will start a premium finance company with COST, and, after a period of time, they decide that they want to let other agents in their region utilize that premium financing company.

“[Doing so] gives them the ability to grow their finance company beyond the limitations of their own books of business,” said Gebhardt. “If they’re putting in 100% of their own agency volume into the finance company, that’s as big as their finance company is going to get – unless they turn around and offer it to other agencies.”

On this front, COST can help, particularly with creating and designing the marketing materials to get the word out there to other agents. This service is in line with COST’s other offerings in the premium finance space, where the name of its game is providing streamlined solutions that agencies can implement easily into their existing workflows.

For agencies, the main benefit they gain from working with a premium financing provider like COST is reaping more revenue, as well as being able to provide flexibility to their clients, who will likely continue to need some leniency in the coming months when it comes to their insurance premiums.

“We have a 30-plus year track record of producing revenues for our clients,” said Gebhardt. Moreover, he added, “Right now is a good time to get into the premium finance industry. As businesses are coming back, the demand for financing is going to be there and it’s going to be significant … and agents can have that flexibility to say, ‘I’ve had a relationship with this insured for five years and if I need to waive a fee for them, or if I need to give them a little bit of a break, I can do that.’ It’s not just about making money – it’s about also servicing the insured and [strengthening] that relationship.”

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