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General agents and wholesale entities typically do not have complete autonomy when
it comes to how premiums are paid for. Their markets (e.g. the insurance carriers
that they distribute product for) will dictate how the premiums are paid. This requires
that a wholesale entity have flexibility in its offerings so that payment terms
that meet both the needs of the carriers and the policyholders are always available.
Input 1 offers two billing methodologies for general agents and wholesalers - Premium
Financing and Installment Billing. When both options are offered they solve the
wholesaler's requirement to provide flexible payment terms regardless of which
insurance product is being purchased.
Managing general agencies, general agencies, excess and surplus lines brokers and
other insurance wholesalers (collectively “wholesalers”) do not frequently
have any control over the financing of the policy premiums that they sell. However,
as the industry continues to mature, more wholesale entities are playing a role
in the referral of premium finance agreements.
Input 1’s gotoPremiumFinance.com
program can provide wholesalers with a means of directing and participating in the
premium financing transaction. In these arrangements, the wholesaler directs its
agencies to use “its” financing program (rather than agents making their
own decision about which finance company to use). Although not required, “GA
Programs” are typically more effective when they have
software integrations whereby every insurance quote prepared by a wholesaler
will be accompanied by a premium finance agreement for the financing of the insurance.
This facilitates ease of use for the retail agency and often leads to a higher “hit-rate”
on wholesaler-directed premium financing. These types of programs are often very
successful when the retail agencies are too small to command the attention of a
premium finance company and will usually lead to improved service levels because
when dealing with the retail agencies, the premium finance company is holding its
relationship with the wholesaler in the balance.
Where name-recognition is important, some wholesalers prefer to create affinity
with their agencies and policyholders by brand-naming the finance program. In this
case, the wholesaler still directs its retail agents to submit premium finance agreements
to the premium finance company and still receives a fee but the financing contract
and all subsequent documents can have a co-branded name shown in place of the finance
company’s name (see note below).
In the most all-encompassing scenario, a wholesaler can form its own captive premium
finance company. This requires a forming a new company, infusing capital and securing
a line of credit. Although this requires the greatest commitment in both time and
money, it also creates the greatest profits for the wholesale entity. Input 1 has
been creating general agent-owned premium finance companies for 20 years. A properly
established and administered captive premium finance company can provide significant
profits to a wholesale entity. Measured in terms of commissions, this scenario can
create the equivalent of 2-8% additional commission income on each policy sold.
The billing and collection of insurance premiums and the service and technology
associated with this process are a critical part of the customer service function.
They are also a significant component of the cost of managing an insurance product.
Input 1 has a comprehensive installment billing service for general agencies looking
to divest themselves of the overhead, technology and day to day management of an
installment billing operation. There is no “one-size-fits-all” when
it comes to installment billing. The installment billing outsource service offered
by Input 1 is comprehensive and can be structured specifically to meet the needs
of your billing center. Input 1 couples our expert approach to building out the
specifications of the billing center with internet and telephony systems that provide
24/7/365 access to policyholder information on a secure basis.
Click an item below to learn more about the Input 1 Advantage:
note: Branding, revenue sharing, incentives, and fees are not allowed and will not be
offered in the state of Texas or in other states where prohibited by law.
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