IPFSDirect
A committed partner
The captive insurance industry is fertile ground for companies that offer a complete package of billing, collection and financing services. Offering those services can enable captive managers to focus on their core responsibilities, says Andy Roderique of IPFSDirect, a business unit of IPFS Corporation.
“Premium financing takes the hassle out of collections for insurance companies by providing their premium dollars upfront.”
Andy Roderique, IPFSDirect
The captive insurance space has entered a period of significant growth. The hardening market and a greater understanding of the captive insurance industry are encouraging an increasing number of businesses to consider going down the self-insurance route.
However, running your own insurance company is not without its challenges. Pricing and managing risk are considerable challenges, even without the additional back-office tasks associated with managing billing and the collection of premium payments. That is why, for many, enlisting the aid of a full-service billing, collection and premium financing services company could be an attractive option.
Premium financing takes the hassle out of collections for insurance companies by providing their premium dollars upfront. It can strengthen an insurance company’s financial performance and ratings, through increased liquidity and investment income—at less cost and risk than billing and collecting premiums on their own.
It allows them to invest premium dollars faster and gives them access to the technology suite of their service provider, without requiring them to invest in one of their own. The insurance industry is rapidly moving towards the digital sale and distribution of insurance products, increasing technology demands on insurance companies and captives.
The result is a significant saving of time and expense, which is especially welcome for small operations such as captives and programmes.
Flexibility
Full-service billing, collection and premium financing services offer captive insurers and programmes considerable flexibility in how they organise their business. Captives collect their premiums in full upfront, whether the insured pays in full or selects a premium payment plan offered by their premium finance service provider.
When the insured selects a pay plan, they make a down payment to the captive and the premium finance provider funds the balance of the premium on behalf of the insured. This enables the carrier or captive to be paid in full upfront and the insured to have a payment plan.
IPFSDirect offers off-the-shelf solutions or can create payment solutions to suit most needs. Every insurer is unique in its billing plan options, requiring different down-payment amounts, different repayment schedules and service charges. While some insurers want the most cost-effective option available, others prioritise convenience and different factors. Creating a billing, collection and premium financing arrangement with a service provider ensures every captive can offer payment plans that best suits the needs of insureds without the costs of running their own in-house billing systems.
At IPFSDirect, the goal is to create a low-touch and timely premium billing, collection and financing process, enabling underwriting companies to focus their time on the business of insurance: underwriting, claims, distribution, and risk management. It means that premium billing and collection is one less thing to worry about.
A consistent offering in a changing world, premium financing has been around for a long time. The fundamental proposition has changed relatively little: at its heart, it has always been about providing premium dollars to carriers upfront and then taking over collecting those premiums from insureds—including customer service support.
Staying ahead of the curve
What has changed for the insurance industry is the delivery, and the technology backdrop in which the business operates. Technology is speeding up claims-handling and improving pricing. Perhaps more important from the insurance perspective, it is increasing the amount of data available to underwriters.
More data can make insurers more efficient, but processing and analysing all the available data represents a significant challenge. This trend has been playing out for years but has accelerated recently: the technology available in the insurance space is unrecognisable from what was on the market even five years ago.
Keeping ahead of the curve as technology advances is crucial for a service provider who wants to remain relevant. IPFS has been busy leveraging new technology and developing products to simplify operations for its carrier customers. One such product is IPFS TotalPay. This unique product allows carriers and programmes to offer insureds the choice of paying premiums in full upfront or via installment plans. It creates a seamless, low-touch transaction that complements the underwriting and insurance policy issuance process and simplifies billing and collections for the underwriting company, agent and insured.
“IPFS has been busy leveraging new technology and developing products to simplify operations.”
IPFS TotalPay is just one of a range of incremental improvements IPFS has made to its suite of products and services in recent years. Others include an enhanced premium finance quoting platform, eForms and text alerts to ensure insureds do not accidentally miss a scheduled payment. IPFS has other new innovations in the pipeline that will be announced in due course.
IPFS and IPFSDirect have been servicing the captive insurance space for over 30 years and have the expertise to understand complex insurance structures and provide financing options. They have a deep network of contacts and relationships in the captives community, having spent many years attending conferences and discussing industry trends with captive managers and other service providers.
IPFS understands the captives industry’s potential and what is needed to fulfil it. Three decades of experience gives IPFS an excellent understanding of the risk profiles of potential insureds of the captive. This is increasingly important as captives branch out into emerging risks.
A captive can be an attractive vehicle for insuring emerging risks, where commercial insurers baulk at the lack of available data. Captives who go down this path need service providers that are equally comfortable working with such complex and unique risks.
Customer service and capacity
Captives looking for a billing, collection and premium financing service provider should bear a few other factors in mind. Customer experience is crucial: any partner offering a service that is intended to simplify the insurance purchase transaction for insureds by taking on administrative functions must back that up with high-quality customer service. Captives should select service providers that have a proven record of delivering billing, collection and financing services.
This is especially true today, when people have become used to such high levels of convenience and service from a new generation of fintech and insurtech providers. Technology has raised the bar as far as customer service expectations are concerned, and service providers that do not raise their own game will be left behind.
Capacity is a crucial consideration for captives and programmes. Some—especially risk-retention groups, which tend to have larger financing needs than single-parent captives—may work with multiple premium finance companies simultaneously because none of them individually has the scale to cater to all their financing needs.
It is important for captives to consider their future growth: a provider may be able to cover their financing needs today, but what about in three or five years? The answer is to select a billing, collection and financing services company that has the scale and wherewithal to meet all the captive’s needs for years to come.
As IPFS is the largest independent premium financing company in North America, originating and servicing more than 700,000 loans annually, and providing billing, collection and financing services across the US and Canada, captives can be confident that IPFS and IPFSDirect have the capacity to support their growth over time.
The industry will see many new programme formations in coming years, continuing the trend of recent times. Many other existing programmes will be expanded, helping companies with unique risks better manage those risks associated with their business activities. These captives should consider working with a service provider that provides the full-service package of premium billing, collection and financing, allowing them to focus all their attention on doing what they do best.
They should make sure they select a partner that knows the captive industry inside out, has the expertise and market recognition to handle complex insurance structures, and has a track record that demonstrates a commitment to the industry.
Andy Roderique is director of carrier services at IPFSDirect. He can be contacted at: andy.roderique@ipfs.com
