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 AFCO and First Funding. The rest of the $150 Billion is financed by small and medium sized finance companies.
The Premium Finance market is an immense, growing market just waiting to be tapped into.
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.
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 registering 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.
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.
The following projection illustrates the expected revenues that can be made from owning a premium finance subsidiary:
|Average Premium||Total Contracts||Premiums Financed||Fin. Chg. Per Contract||Fin. Chg. On Portfolio|
*The revenue projections are based on an APR of 18% which is, on average, the allowed APR in most States. We will assist you in planning and structuring your program, and provide you with a tailored estimate about how much you stand to make in revenue.