Single Source for Premium Financing

November 25, 2007

SINGLE SOURCE FOR PREMIUM FINANCING

By Bill Friend

Insurance premium financing has expanded from commercial insurance policies to personal lines policies as well as life insurance policies. PFA – Premium Finance Associates has the resources to offer financing in all three critical aspects of insurance premiums. 

Over the past 50 years or so, commercial insurance policy financing made up the majority of premium financing. The non standard or Excess & Surplus lines markets needed payment in full either at binding or within 30 days. To the average business, a $10,000-$50,000 premium payment could seriously disrupt their cash flow. Commercial Property and Casualty premium financing was the best way to create an off sheet balance scenario whereby their lines of credit with the bank were left intact.

There are many agents who use several premium finance companies due to the fact that most premium finance companies are specialized in either commercial lines or personal lines.  As an accommodation, PFA began to offer personal lines premium financing to the agents who not only had considerably large commercial books of business that needed premium financing, but also smaller non standard books of personal lines. The premiums for personal lines are smaller and more labor intensive than the larger commercial premiums but we have newer technology that has mitigated that considerably.

Agents have also diversified where they not only offer a wide array of P&C products, but have added life and health specialists as well. PFA can also offer a premium financing piece for the high net worth individual for up to 27 months in premiums at or exceeding $200,000. “Our high rankings in Google as well as other search engines brought in agent requests for not only commercial lines premium financing, but also personal lines and life insurance lines,” says Bill Friend, President. “We felt we had to respond to the need in diversifying not only our premium financing markets, but also our asset based lending business. If we can’t do it directly, we have several business partnerships that we refer to.”

PFA – Premium Finance Associates works with over 500 insurance agents nationally. FCF – Friend Capital Funding, a sister company, works with insurance agents to increase and diversify their income streams by selling the agent customer base highly sought after asset based lending products. “In light of the recent sub prime banking crisis, banks will take a more rigid look at companies before lending. Our products include account receivables funding, credit card sales financing, insurance agency loans used primarily for acquisition and perpetuation and revolving lines of credit,” says Friend. “We have built up a strong agency base and have much more to offer agents in a soft market than other straight premium finance companies. We are seeing $50,000 premiums last year coming in for recent renewal at $35,000 and when an agent can’t make up the difference in insurance premium, it’s good to know diversification in other related products can help grow and diversify the agency.”

**Bill Friend is the owner of PFA / FCF and frequently submits articles for the insurance agent’s general interest for publication in various web research engines. 

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