Evolution, Inc. since 1979


Why other banks do premium finance

Let us suppose that there is an industry that is available to your bank that would generate returns to the bank far in excess of almost anything that you are currently invested in.

Let us suppose further that the bank could post:

The industry is financing property-casualty insurance premiums. Other banks (see below) keeping it secret, have been doing it for years reaping the harvest. The premium finance business is a healthy and robust industry and is being given away to others, generating transactions, as you read this document, at a rate of about $156 million dollars a day.

You have two options, if you decide to do insurance premium finance, 1) get software and get insurance agents to send you business like everyone else or, 2) use our unique methodology and software we developed over 30 years to take insurance agents from the marketshare of other banks listed below.

Evolution added another 10+ man years on top of existing innovation to create this new, innovative premium finance method referred to as Agent’s Plans, which has been specifically designed to have a major impact on the premium finance industry. 

Most importantly, our "Agent’s Plans" will help make sure agents stay with the bank, never again sending their business to another premium finance company or bank!

Until now, premium finance software has been too expensive for an agent to start a premium finance company or the amount of capital required for a line of credit was prohibitive.  The first banks to initiate the following plan will set the pace for the future.  Simply put, our plan is based upon a single word: “LOYALTY”.  Loyalty is closely linked to profits (something the agents can fold and put into their pockets) and profit which is why we are all in business.

For various reasons agents are giving their property-casualty finance business to any premium finance company that asks for it. 

Agents are the backbone of one of the largest industries in the world, insurance.  Why not tap into the same channel?  Agents (including general agents) have been making premium finance companies rich for many years.  Agents, including general agents are the sole source for premium financing.  Agents are the commodity.  When you capture agents, you capture their business.  Agents are the single most important element of the premium finance industry, so much so that companies fight for their allegiance.  Agents realize this and are able to shop for better rates and terms from company to company.

Rates alone have never been, and will never be, the factor that determines who gets the premium finance business.  There are more than 1,200 P&C (property and casualty) carriers with different rates and each has developed loyal agents.  It is a fact that the primary reasons for their agents’ loyalty include the commission schedule, the services they provide and their underwriting rules.

The real question is this:
How can we get the agents to flock to the bank and keep them loyal to the bank?

The answer is to provide a competitive service that no other premium finance company can offer, a service that makes the agent so much money that the agent’s current finance company cannot match or outperform it.

As a Bank with a significant source of money, the question becomes how can you best serve the agent and develop loyalty while increasing bank assets?

About this web page

 

It is lengthy page and covers a lot of important aspects about the insurance premium finance industry policies and procedures. Evolution has spent countless man years in order to bring banks this unique way to get non-predatory loans. Insurance premium finance for decades has state statues on how business will be conducted.

Without a doubt, we are secretive about the methodology we created including our four new "Agent Plans" and how our software works in conjunction with all parties involved. To protect our interest, we do not put all the details on the web.

It's also all about the competitive edge it can create for your bank while striping marketshare from other huge banks in this industry. Understand that another bank made close to 65 million in one year from premium finance alone. This can allow you to strip business from them and other banks like them while making it nearly impossible for them to get the business back.

Later, if you should contact Evolution we can arrange to provide all the redacted details we talk about on this web page. Only then, will you understand why we protect it. You would do the same, if you had it.

With that said, if you have an interest and want more in depth information about this program, you can request the book we wrote. We will require a mutual confidentiality agreement to protect each others interest. Also, we can provide additional information, including Excel pro forma spread sheets. (read more...)

To find out more, call Don @ 913-284-2654 x105 or email us.

Premium Finance company facts

 

All comparative measurements and benchmarks are based upon analysis of hundreds of premium finance companies over a ten-year time span.

  1. The industry finances about $40 billion in premium finance per year (way back in 2003).  That is about $156 Million dollars per working day.
  2. National and regional premium finance companies, in terms of sources of business, are not community based.
  3. The typical premium finance company retains 20% of its income. Performance in the 20-25% range is considered above average, 25-30% is considered good. Performance in the 30-40% range is considered excellent.
  4. PF companies typically return 25% to 40% on invested capital.
  5. Banks engaged in lending to the premium finance industry typically start out at an 80% Rate of Advance (4.0:1) and will gradually move the customer to a 90% Rate of Advance (9.0:1). One lender will go as high as 92% (11.5:1). The rate of advance is predicated on the borrower putting up the difference in their own capital. Needless to say, it requires a great deal of capital. A $2 Million line of credit requires $400,000 in capital.
  6. The mark off of uncollectible balances is negligible. The benchmark number for commercial premium finance companies is ½ to 1% of receivables, with the larger companies (>$100 Million) closer to ½% and the smaller companies closer to 1%.
  7. Data compiled by lending banks indicates that the most high-tech companies generate a cost of about $36/contract, while commercial companies in the $60-$200MM range (A/R) come in around $80/contract.  The largest companies (AFCO, AICCO, Cananwill) using older, legacy receivables management systems run upwards of $160/contract.  This is, admittedly a difficult number to assess since there can be so many variables involved.
  8. Even though it is done every day, disbursing directly to the agent is a dangerous practice at best since it could jeopardize rights to the unearned premium. Most general agents require direct payment. Special programs need to be in place to be able to scrutinize each agent.
  9. Most premium finance companies focus great attention on uncollectible balances (mark-offs) and require some level of managerial oversight. Every mark-off represents a failure of some sort to adequately safeguard the collateral. A review of marked-off balances provides a little after-action report, which may reveal weaknesses in loan structure, underwriting, collection efforts or agents’ selection of business.
  10. Fraud does not occur very often, but one fraud can cost a premium finance company so much money in such a short period of time that its prevention must be a major priority. An effective anti-fraud program will consist of employee training, software screening and managerial oversight.
  11. Premium finance companies can write nonstandard auto business at state maximum rates (20-40%), but banks are not constrained by state usury laws.
  12. PF companies prefer not to use ACH for insured’s payments because there is too much money lost in late fees if most payments are received on time.

Why migrate to this industry?

 

After 50 years and $40 billion a year financed, the premium finance industry is not going to change to the traditional banks point of view, so the bank will have to change to the premium finance way of thinking. 
If you want to enter the premium finance market you must be willing to look at facts before making any decision.  These loans are made without doing any credit checks on the borrowers because the loans are fully secured by the unearned portion of the premium.  Premium finance companies never get social security numbers and have done tens of billions of dollars in loans.  The only reason the Bank needs to get the social security number or tax identification number is because banking laws require them to do Text Box: How much of the tens of billions in premium are coming from your existing customers or within a 10 mile radius of your bank?    so to comply with CIP requirements of the Patriot Act and BSA/AML Act.  Every business day, $156 Million dollars in loans with an industry average mark off of ½ of 1% of accounts receivables is transacted and very few banks are able to tap into it.

It can be done.  SunTrust Bank and BB&T, to name a few, finance billions of dollars of insurance premiums by themselves.  Consider that SunTrust made about $65 million a one year.  If these banks can do it then why can’t you?  Most banks simply can’t see or don’t realize the potential. 

Average Mark Off

 

How is the industry average mark off of ½ of 1% of accounts receivable possible?  Most, if not all states have laws like those listed below.  It is abundantly clear that the state attorney general is more effective than any collection agency.  In fact, in the last 30 years in this industry we have never heard of any premium finance company that was unable to gain satisfaction through state regulators, forcing them to appeal to the attorney general because all carriers know the law.

Return of Unearned Premium
When a financed policy is cancelled, the unearned premium, by law, must be returned to the company that financed the premium. Following are examples of state statutes requiring return of unearned premium. For space reasons all states are not listed.

Alabama
Insurance code, ch.40, Section 27-40-12
Insurer shall return gross unearned premium to finance company.  Return premium must be paid to finance company within 90 days after cancellation effective date. Credit balances must be paid to insured within 30 days after receipt.

Florida
Section 627.848(6)
Insurer shall pay gross return premium to finance company. Return premium must be sent "promptly".

Illinois
Insurance dept.. regulations, article xxxiii, section 521(4).
Insurer shall return gross return premium to finance company. Insurer can pay net amount in the case of assigned risk policies.

Kansas
Insurance dept.. Kansas Premium Finance Act, section 40-2612(e).
Whenever a financed insurance contract is canceled, the insurer shall within 20 days of the effective date of cancellation, return whatever gross unearned premiums are due under the insurance contract to the premium finance company, either directly or via the agent of agency writing the insurance, where an assignment of such funds is included in the premium finance agreement for the account of the insured or insureds.

Michigan
Insurance laws, section 500.1511(5)
Insurer shall return gross unearned premium to finance company. Third parties must be notified on or before the third business day following receipt of the premium finance notice of cancellation.

Minnesota
Insurance code, ch.59A.12 Subd 1-3
Subdivision 1 requires pro-rata computation of return as well as gross return paid within 30 days of cancellation.  Subdivision 2 requires that gross return be computed based upon the deposit premium whenever audible.  Subdivision 3 requires that any credit balance be paid to insured within 30 days of receipt of the return premium from company or agent.

Missouri
Statutes, section 364.135
Insurer shall return gross unearned premium direct to finance company. It requires that return premium be paid to finance company within 60 days after cancellation.

New Jersey
Dept.. of banking, insurance premium financing act, ch.221, Section 14.
Insurer shall return gross unearned premium. Requires that return premium will be paid to finance company within 60 days after date of cancellation or 60 days after completion of the audit. All audits must be completed within 30 days of cancellation date.

North Carolina
Statute 58-60(5)
Insurer shall return gross unearned premium to finance company. Requires that return premium be sent direct to finance company "promptly" and credit be returned to insured "promptly".

Oregon
Dept.. of Commerce Oregon statute 746.505(5)
Insurer shall return gross unearned premium to finance company.

Pennsylvania
Premium finance company act, Pennsylvania insurance laws, ch.4, Article ii, section 11 (40 p. S. Sec.3311).
Insurer shall return gross unearned premium to finance company. Requires that payment be made to premium finance company within 60 days after cancellation. Finance company must refund credit to insured within ten days of receipt from insurer.

South Carolina
Insurance regulation 69-10, paragraph 21-23.
Insurer shall return gross unearned premium. Requires that return premium be paid to finance company within 30 days after cancellation. Paragraph 23 requires that credit balances be paid to insured within 30 days after receipt from insurer.

Finance Charges

 

There are some extra benefits most banks don’t realize exist. 

First, it is allowable for a bank to charge interest on funds that have not yet been advanced.  This is possible because, by law, interest is charged from the inception date of the policy, regardless of when the contract was signed, received or funded. 

Second, because of the payment arrangements between insurance agents and insurance companies, there can be substantial delays between the time the agreement is booked and the date the check is released, adding significantly to the yield. 

Last, you are allowed to continue to earn interest on cancelled contracts until the entire premium is returned and all earnings are received before a refund is returned to the insured.

Collateral

 

All premium finance loans are collateralized by the remaining unearned portion of the insurance policy. Can you name any other lending activity in which the collateral is returned to you as a check, ready to cash, by a simple notification?

I can’t either.  The bank/agent as a premium finance company has the right to cancel the insurance policy and recover the unearned premium because a limited power of attorney has been incorporated into the loan contract and is backed by state laws, which pave the way to the low mark off.

Insured Default

 

The bank is allowed to continue to earn interest on cancelled contracts until the entire premium is returned (by law) and all earnings are received before a refund is returned to the insured.  Regardless of whether the Bank or the agent services the loan, you have state laws in place to keep the mark off down.

Why would agents switch to your bank?

 

If the bank acts like every other premium finance company they probably won’t.  To ensure its competitive edge, the bank will have to change its way of thinking.

The critical aspect to the success of this plan will be utilizing the Agent Plans within this document.  The fact that both the bank and the agents are local is a major benefit to the bank.  The existing premium finance companies are trying to overcome that long distance barrier by utilizing marketing reps and internet access to reach these distant agents. 

As you read further you will see that we believe we have the solution within the Agent Plans.  Remember, the business is there and is being given to others at a pace of $156 million dollars a day.

Renewals

 

Every business wants to be like the local cable television, cell phone, or insurance company that receives renewals on an ongoing basis.  Their industries, for the most part, keep growing.  This is the other side of the premium finance industry that is phenomenal.  It’s only a question of whether or not you want to be a part of it. Retention and renewals mean keeping agents happy.  Growth can be very rapid depending on the agents you can keep. 

Other bank benefits

 

New deposit customers increase the bank’s asset base.  Remember that you will have a presence in the agent’s office and you can solicit the agent himself for commercial loans, auto and equipment leasing, investment accounts or any other product that the bank offers. In addition, you may have gained access to all of the agent’s customers, another market entirely.

What is the exit strategy?

 

What if you don’t like the industry once you get started?  All financed policies are either 6 month or 12-month policies, and most premium finance agreements are 9 or 10 months in length. It is a very short-term portfolio that can be liquidated in a year.

APR

 

All personal lines auto and small commercial lines policies are at the state max rates (around 21% APR).  As the commercial lines policy amounts get larger the APR’s get smaller, but there is a variation from market to market.  We have, however, seen agents charging 48% APR.  Regardless, the yields are good enough for the major premium finance companies to aggressively seek commercial lines.

Intro into premium finance marketing

Current Competitive Areas

 

Premium finance services are marketed and offered in basically the same way virtually everywhere, however the attitude of the individual agent determines the approach to be used.  In the past, there were really only six major points of competition that are meaningful to the agent.

A.  Rate

As long as the rate is reasonably competitive, the agent will not usually object.  Above $10,000 the competition will become a little more intense.  The large premiums are what the big dog premium finance companies really compete for.

B.  Down Payment

The standard of the industry is approaching 25% for a 9-pay policy, 33% on a 4-pay policy with both requiring 10-Day Notice of Intent to Cancel.

C.  Check Release

Release of funds is an important competitive issue to the agent.  Some premium finance companies release checks the same day contracts are received and others wait weeks. In any case, it is currently outside the control of the agent.  Some agents enjoy a 30-45 day float in which the premium must be paid to the carrier.

D.  Flexibility

Agents want to be able to get financing even when the contract falls outside of the routine deal.  A rigid approach will drive the business to a different premium finance company that understands and accommodates agency problems.

E.  Service

One characteristic of the premium finance business is that the service is available almost anywhere, so much so that the agent does not owe the premium finance company anything.  This is truly a service business, all other things being equal. Because his primary business is selling insurance, the agent will tend to adopt the path of least resistance when it comes to financing the policies. Anything that makes it difficult to deal with the premium finance company will be a major obstacle.

F. Fees

As of this writing, 13 states prohibit premium finance companies from paying fees to agents and 37 states either allow the practice or do not address the issue.  Although it doesn't matter much in the 37 states that allow it, banks have an edge in those 13 states that prohibit the practice because they are not bound by the premium finance statutes; they can and do pay fees in those states.

This practice is so common that it will not even turn heads.  The percentages are usually less than 2% of the amount financed and usually the agent has to increase the APR in order to pay for the fee. This can be a significant increase since the APR must be increased by 3.5 points for each 1% paid to the agent. 

As an example, a commercial contract with a contract rate of 12% will have to be increased to 19% (12% plus 3.5 x 2) in order to pay the agent a fee consisting of 2% of the amount financed.  Many agents are unwilling to do this to keep the premium finance company profitable, but it becomes a different situation when the finance charges flow to the agent, as they will in Agent Plan 1.

The 80/20 Rule

This rule appears to apply to most companies.  80% of the business comes from 20% of the agents.   You may have that 20% segment close to your bank.

Some agents may only do 10 loans per month, but those 10 may be for $50,000 each.  This agent may only have $20,000 cash capital. The moral is that you never know who will be the top producers.

Evolution's Innovative Methods

 

We have watched premium finance companies competing for the same business to the point agents cringed every time a premium finance company contacted them with the same old story.  We are changing that by listening to the agent. 

Service

We have talked hundreds of agents that to do not like the service given to their customers by premium finance companies.  Their perception is they are too quick to cancel and, since they don’t know the customer the way the agent does and they refuse to be flexible for those that are always good for the money. 

The solution is to offer 4 new unique plans developed by Evolution. At any given moment, ten percent of the agency population is not satisfied with their present premium finance company and will give the business to the next individual that walks into the office and asks for it. 

Our 4 new innovative "Agent Plans" and profit

To develop an agent who will be loyal over the long run, the premium finance funding company (bank) will need to commit on the items above:  Rate, Down Payment, Check Release, Flexibility, and Service. 

In addition, the bank should engage in the biggest departure in this industry by giving the agent a new value created by Evolution working in conjunction with banks and a seasoned executive with over 28 years of progressive experience in the marketing of financial services products and 20 years in management within the Premium Finance Industry..

This value (not commission) and not a new concept in other industries has led the way to loyalty within other industries so this as well should lead the way to loyalty within the premium finance industry as well.  Going back to the question, “How can we get the agents to give us the business?”  Evolution's new "Agent Plans"

The bank can offer one or all of our four "Agent Plans"Evolution will explain this value and why it is important, email us.

Premium Finance Loan Agreement APR

If we extend this new value to the agent, rates will cease to be a competitive issue.  The agent will want to place his business with the premium finance company and will not “shop” the rate.

The bank benefit is twofold; first the bank just acquired a new bank deposit customer to increase the bank’s asset base and second a customer that will sell the bank all the premium finance business within the scope of our four new agent plans.

If it appears that we are secretive about our four new "Agent Plans" and how it works you are correct. You will understand why because it should give you such a competitive edge and you will want to do the same. To find out more, call Don @ 913-284-2654 x105 or email us.

Bank Strategy

Objective

 

Provide a financial vehicle to achieve long-term loyalty between the agent(s) and the bank while posting significant profits, increasing the asset base and cross selling to the agent. 
Through Evolution's "Agent Plans", the bank can create the same successful relationship that other companies have with their agents. (Again not just commissions)

The relationship will be beneficial to both sides.  It will be formalized through a contract that spells out mutual consideration between the bank and the agent that will be extraordinarily difficult for any competitor to penetrate.  

Premium Finance Market

 

This industry is generating about $156 million dollars a day and is being given away to various premium finance companies.  How many agents are in your yellow pages?

Be in the black in 12 months

 

This can be a realistic time frame depending on time and effort put forth by the bank and the agents that come onboard.  Since 1979, we have witnessed many premium finance companies work themselves into the black very quickly (6-9 months). 

What really matters the most?  Establishing long-term relationships and reaching break-even within the first year are both achievable. Remember the APRs on these premium finance loans are well above prime.  Commercial lines can range from 12 to 20% APR and personal lines usually always go for state maximum rates bringing around 21% APR.

How do you learn?

 

This premium finance Turnkey Plan is just that, a comprehensive plan to assist the bank in entering the premium finance industry with minimum risk and maximum profitability.

In addition to consulting services of the principals, Evolution can provide educational materials, on-site visits, training, software, comprehensive monitoring, recommendations for regulatory compliance and third-party servicing.

Compliance

 

Evolution is fully aware of the multitude of compliance issues facing a bank that embarks on any new venture.  We are familiar with requirements spelled out in the Patriot Act of 2001, BSA/AML Act, Gramm-Leach-Bliley and Sarbanes-Oxley Act 2002.  Those requirements of the Patriot Act and BSA/AML that directly affect premium financing, such as risk assessment and customer identification are directly addressed through EVOLUTION’s software and procedures. We provide the third party technical and industry expertise required by the OCC and FDIC.

The Community Reinvestment Act

 

The software (below) has the ability for census track gathering and reporting.

Software

 

Evolution created this unique software keeping in scope of the Evolution's "Agent Plans", a key element in accomplishing our objectives.  

  1. It is a proven, seasoned Windows product on the market for the management of premium finance receivables.
  2. EVOLUTION’s software is the only software that can handle all the Evolution's "Agent Plans".  EVOLUTION’s software has full debit-credit accounting that flows to a full general ledger.
  3. Agent Express™ is the only agent’s software with a minimal usage fee, a method designed to be feasible and cost justifiable for all agents.
  4. Securitization option if you chose to securitize loans. 
  5. We offer encryption for software’s database-related network traffic with a well-known and time-tested encryption algorithm to perform encryption before any data passes over the network.  The four different encryption methods include; 1) all communications encrypted 2) to/from specific clients 3) to/from specific servers and 4) no encryption.  Encryption levels available are low (40-bit), medium (56-bit) or high (128-bit).
  6. Evolution is the grandfather in premium finance software development since 1979.  Clearly an industry leader with about $14 billion dollars and approximately 1.1 million loans put through our Windows software alone at last count.

Resolutions

Agent Facts and Banks Future Impact

Agents Fact #1

In the past, the agents have given away their premium financing because they felt their primary business was the sale of insurance and their compensation was the commission received.  The financing was simply a means to write the insurance policy. Although they received compensation in many states, most felt that it was not adequate for the amount of work they do.

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #2

Agents are dissatisfied with service given by most premium finance companies to their insurance clients.

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #3

Most agents have an ownership value in their agency. 

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #4

Agents have been reluctant to go into the premium finance business because of the startup cost of software and forms.

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #5

Most have money in a low interest money market or brokerage accounts in other banks.

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #6

Depending on the state in which they reside, many agents make nothing on the premium finance business they write.  In those states where rebates are allowed, they range from ½ to 2% of the amount financed, with 1% being the norm.  Regardless of what the agent is paid by the premium finance company, the agent stands to make 2½ times more using their capital when financing their own business.
(See “Compensation Comparison - % Agent Rebate vs. Agent Plan 1”)

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Agents Fact #7

Few agents are licensed to do premium finance business.  However, inquiries sent to the regulators in each state revealed the following:
Agents in the following states do not need a license to finance their own policies. 
Consumer (personal lines policies) IN, IA, KS, MI, MO, OK, OR, SD, TN, UT, WI, WY
Commercial (commercial lines policies) CO, ID, IN, IA, KS, LA, MI, MO, OK, OR, SD, TN, UT, WI, WY

The Bank’s Future Impact
Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Bank Facts and Solutions

 

Bank Fact #1
We want to have long-term relationships with our agents.

Solution
Any agent signing on to Agent Plan #1 or #2 will create a series of interactions with the bank that will be difficult for a competitor to break.

Evolution's methodology with the "Agent Plans" are so innovative we will not publish this on the internet. We can provide it, call Don @ 913-284-2654 x105 or email us.

Bank Fact #2
When working with agents we must have an economical way to underwrite them and monitor the agent’s activities.

Solution
The best, systematic method to underwrite a portfolio of premium finance receivables is to utilize EVOLUTION’s software that has options which will allow us to specify terms and select loans by either admitted or non-admitted insurance companies, per state, and by the rating assessed within A. M. Best, Duff & Phelps, Fitch, Moody’s, or Standard and Poors.  The Remote Audit Tool™ allows us to monitor every aspect of the agent’s daily operations.

When the day comes that securitization of the portfolio becomes necessary or desirable, the software has that functionality.

Bank Fact #3
If the bank is to offer different Agent Plans then different solutions are needed.

Solution
EVOLUTION’s PF Back Office™ and Agents Express™ data files are compatible.
The bank needs a standardized "Agents Plan" Package (e.g. software, forms, reports, procedures and agency agreement) for delivery to the agent.

Bank Fact #4
The bank needs a standardized "Agents Plan" Package (e.g. software, forms, reports, procedures and agency agreement) for delivery to the agent.

Solution
EVOLUTION’s software.

Although the agent will know that Evolution or the bank can and will monitor activities, the extent of the monitoring will remain confidential.

Bank Fact #5
The plan must include the anticipated moves that the premium finance competition might employ.  Little to no attention will be paid until the bank starts taking their largest agents away from them. 

Solution
We think it will take others a years to have the ability to offer similar type "Agent Plans" similar to what Evolution created. 

First, the agents can be offered more money to remain where they are, but paying more than 3% of the amount financed is simply not feasible. Remember, we are not supporting a large premium finance company infrastructure. There just isn't enough profit to give that much away. 

Second, there is no software available that allows the monitoring that is provided other than Evolution's Remote Audit Tool™.

Historically, these companies have been very reluctant to let anyone even know what they do. Plus, this would undermine all the processing claims these companies have been spouting to their agents for years.

Bank Fact #6
Premium finance underwriting and auditing procedures are critical to safeguarding the banks investment.

Solution
The bank needs personnel with detailed knowledge of premium finance accounting, procedures, and management, as well as property casualty insurance in order to comply with various sections of bank statutes.

Evolution will provide the professional personnel, depth of knowledge and industry expertise that the bank requires to enter the premium finance industry, while our software provides standardization of reports and procedures, as well as easy and accurate transferability of files.  Following are several possible solutions:

Evolution provides the format and reports for the bank to monitor all daily activities within the scope of the "Agent Plans". Provide the ability to conduct certain financial and premium finance audits by electronically transferring the files to the batch’s location, saving travel costs.

Bank Fact #7
Software vendor coordination is critical to the success of the plan.

Solution
Evolution provides the knowledgeable personnel to coordinate the bank and the "Agent Plans".

Bank Fact #8
If the bank decides to depart the industry or wishes to liquidate a portfolio for any reason, then the bank will need someone to complete that task.

Solution
Evolution stands ready to provide an exit strategy by running off the portfolio on behalf of the bank.

Bank Fact #9
Some premium finance companies are offering to buy excess loans from other premium finance companies, including agent owned premium finance companies. 

Solution
These offers are not a threat.  Selling paper does not create the agent’s profit margin that the bank can offer through the Agent Plans.  The purchase of contracts is based upon an agreed “buy rate” established by the purchaser.  The seller’s margin is the difference between the buy rate and the contract rate, which is typically 5-7 points, but can be much less.

Once the agents (the source of all premium finance agreements), see the potential profit and the ability to service their own business, there will be little that competing premium finance companies can do to lure them away. 

To find out more, call Don @ 913-284-2654 x105

Interested? (read more...)