Premium financing options for agency success

Today’s economic climate is making it challenging for many insureds to afford life insurance premiums upfront. This hinders their ability to obtain adequate coverage. Traditional financing methods can be complex and time-consuming, creating barriers for both agents and clients. Not only does this limit your client’s coverage, but it also limits your agency’s growth.

Agencies have a significant opportunity to improve customer experience and drive revenue growth by strategically offering premium financing options. Premium financing can make insurance more accessible and affordable, while also boosting agency revenue.

Work smarter, not harder: Streamlining operations

The adoption of agency bill financing has remained flat due to the multiple handoffs and clunky manual processes among the insured, the agency, the agency management system and the premium finance provider. These cost all the stakeholders time, errors and omissions risk and poor experiences. But that doesn’t need to be the case anymore!

Premium finance can now be embedded into an agency’s digital payments platform to offer flexible payment options at checkout. This creates an insured-led workflow for premium financing with minimal agent intervention, reducing complexity and time for all stakeholders. It also automates back-office tasks, reducing both accounting work and operational costs.

When a financing agreement is signed, the financing activity is automatically created in the agency’s management system, seamlessly transferring the financed amount from the insured’s account to the premium finance provider. Reconciliation of down payments and financed amounts across multiple policies are handled efficiently, further minimizing administrative burden. This integrated process makes it easier for your agency to capitalize on financed premiums while offering a valuable resource to your clients.

Happy clients, healthy bottom line: The CX edge

A happy customer is a retained customer, so it’s important to create the best experience possible for your clients. Premium financing is a convenient way for insureds to pay for their policies, as it spreads the cost out into monthly payments rather than requiring a large sum upfront. It’s a great option because it allows policyholders to get the right amount of coverage for their needs when the premium could be cost-prohibitive.

It also gives clients more control over their payment options. They can choose to pay in full or opt for financing on a single screen at check-out. If they choose financing, they can sign the financing agreement, make a down payment and set up recurring installments all in one streamlined experience. Insureds can even solicit financing on a single large premium or multiple combined invoices to fit their financial needs. Integrating premium financing allows agents to deliver a client experience that will foster loyalty to drive growth to your top line and cut costs to positively impact your agency’s bottom line.

Show me the money: Fueling revenue growth with premium financing

Clients are more likely to purchase higher-value policies or add-ons when they can easily obtain financing that spreads the financial burden out over time. By automating more of the financing process for the insured and the agency, the ratio of financed payments can increase, leading to amplified earnings for the agency.

Premium financing can be a profit center for your agency. Agencies, on average, make around 2%-4% APR on funded loans. So, for an agency that does $20 million a year in financed policies, an embedded premium financing solution could help you increase financed premiums to $40 million. That means the agency's financial gain would be $400,000-$800,000, and this doesn’t even account for the time savings captured by automating the manual work currently done by your producers, client service representatives and accounting teams. This makes premium financing an easy, low-effort way to boost revenue.

Premium financing is no longer a luxury but a necessity for agencies looking to thrive by serving a broader range of clients and maximizing their potential. Strategically implementing premium financing options can transform operations for life and health insurance agencies, making insurance more accessible to a broader range of clients and maximizing your revenue potential.

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Chase Petrey is president of applied pay at Applied Systems. Contact him at [email protected].