ZiP Partnership
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For Insureds
In the competitive and challenging market conditions faced by insurance professionals, it is critical that you service your customer to the highest levels possible. Premium financing can offer a solution to clients’ cash flow problems resulting from unexpected premium increases. By offering premium financing as a part of your presentation to your client, you can add more value to the service you provide. Most premium finance companies can assist you in identifying benefits of insurance financing based on your client’s individual needs. Here are a few of the benefits of insurance premium financing.
Budgeting of Cash Flows
The key benefit of premium financing to the insured is that the monthly premium installment can be part of their budgeting process. Rather than having to allow for large payments of premium at certain times during the year, the payment to the premium finance company can be scheduled along with other monthly expenditures such as rent, utilities and payroll. This helps to smooth cash flow and expense allocation for the insured.
Increased Leverage of Available Assets
Business loans require an asset to be mortgaged as collateral, and many companies are limited in their borrowing ability by the amount of un-pledged assets. Premium financing allows the insured to use the asset of the insurance policy to secure the loan. This leaves other assets on the balance sheet untouched and free for use by the insured as they see fit. In addition, because premium finance agreements are less than one year in length, they are considered “off balance sheet loans.” This means premium finance debt can be excluded from an insured’s balance sheet to minimize long-term liabilities. “Off balance sheet” loans are especially useful to publicly traded entities because it helps reduce the companies debt ratios.
Alternate Source of Capital
By using premium financing the insured does not have to use other sources of capital, such as a line of credit. Existing cash and near cash assets do not have to be liquidated to pay insurance premiums.
Flexibility of Due Dates and Repayment Schedules
The normal practice of premium financing is that the repayment dates are at 30-day intervals after the effective date of the financed policy. Most premium finance companies can adjust this date to suit the insured’s specific cash flow. Premium finance companies offer varied payment plans, subject to credit approval; from three monthly installments to twelve equal payments, including down payment. Seasonal, quarterly and multi-year repayment plans can also be arranged.
After Tax Benefits of Insurance Finance
An often overlooked advantage of premium financing is that of the after-tax benefit to the insured. This is sometimes called a “cash flow analysis”, but is different from the typical cash flow analyses prepared by accountants. Using the insured’s internal rate of return on investments and their tax rate, the tax savings that accrue by using premium finance can be calculated. In typical circumstances, the after-tax benefits offsets the real cost of the financing to the insured.
Low Cost Financing
Premium financing is highly competitive. It offers a fixed-cost additional line of credit, without up-front arrangement or facility fees or other charges.
On top of these benefits to the insured, receivables are no longer your problem. ZIP takes the burden of tracking and managing premium payment off of your shoulders. The process of billing and collecting is typically part of the premium financing process. This allows you to focus on providing your clients the best in insurance coverage and costs.
For Agents
We offer comprehensive solutions when quick action is essential. These are just some of the benefits for agents utilizing ZIP Premium Finance.
- Improved receivables management with reliable funding dates and streamlined office procedures.
- Full commissions received up front
- Increased retention rate through with ZIP IT renewal retention
- Collection activities and bad debt expenses are reduced.
- Liberal cancellation philosophy helps keep accounts in force.
- Competitive profit sharing options.
- Production lists, cancellation reports, and insured payment status at your fingertips
- Get accurate quotes and quick credit approvals within minutes.
- 24/7/365 website and phone access to account history, reports, quotes, invoices, etc.
- Convenient payment options for ease of doing business
For Carriers
WE BILL …WE COLLECT …WE DISBURSE …WE TRACK …YOU FOCUS ON SELLING!
Carriers and MGA’s should be focused on underwriting success and selling insurance policies. A part of the successful underwriting process is achieved by reducing administrative costs to maximize profitability. Our billing and collections process takes those functions off your plate and allows you to focus on what’s important. By partnering with ZIP to manage your collections and accounting, you automatically become more efficient and more profitable. Our clients often outsource their entire billing and collections department to us. After all, we are experts in the billing and collecting process.
Optional Programs:
ZIP has customized programs that accommodate all classes of insurance. Some sample financing options include:
- Finance charges paid by insured with carrier/mga revenue component included
- Finance charges paid by insured without carrier/mga revenue component
- Finance charges shared by insured and carrier/mga in partial subsidy
- Finance charges paid by carrier/mga in full from cost savings from program in full subsidy
Other Highlights:
- Daily insured status reports
- Daily, weekly, or monthly funding
- Flexible insured payment options