What is insurance premium financing?

It is a loan between two parties—the insured and the premium finance lender. It is a “specific purpose” loan, made only for a specific reason and under specific conditions. It is a collateralized loan, which is secured by the unearned insurance premium on the insurance policy being financed.

Why should my insurance agency offer insurance premium financing?

Insurance premium financing gives insureds the ability to spread insurance premium payments out over a period of time. It also enables the agent to offer a more comprehensive insurance solution and improve agency cash flow by receiving all commissions up front.

What are the basic criteria for a premium finance loan?

• The policies securing the loan must be cancelable commercial insurance policies
• The coverage must be financeable under applicable state law
• Return premiums must be calculated on a pro-rata or short-rate basis
• The coverage provided should be by an insurance carrier that is rated B+ or higher

What basic information is needed to get a premium finance quote?

• Information regarding the insured
• Information regarding the insured’s policy
• Information about the insurance company and wholesaler, if applicable

What does the average premium finance agreement include?

• Insured/Broker data
• Policy Data
• Insured Tax Identification Number as required by US PATRIOT Act.
• Insured and Agent Signatures
• Term and Conditions

What happens in the event of default or cancellation?

• Notice of Intent to Cancel sent as required by state insurance law
• Notice of Cancellation will be issued in compliance with the applicable state statue
• Insurance Company returns gross return premium to BIC
• The policyholder is immediately liable for the balance due on the loan