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Target Markets Program Administrators Association Vendors COST Financial Group As an independent agent, wholesaler/MGA, insurance company or even an official with an agency group, have you ever considered owning an insurance premium finance company but rejected the idea because of the complications and extra work you envisioned? If so, you are not alone. Take a closer look, however, and you’ll discover that dozens of your insurance industry counterparts have found a way to overcome these obstacles; they’ve decided to let COST Financial Group, of St. Louis, do the licensing, administrative, collection, and accounting functions in exchange for a modest service fee. Basically, the premium finance company owners earn the profit; COST does all the work! The unique COST program, with over 175 nationwide clients, manages and operates premium finance companies with no additional staffing and no fixed overhead to you, the client. David E. Gebhardt, who founded COST in 1989 and serves as its president and CEO, recognizes the reasons agencies shy away from owning a premium finance company. “They are unfamiliar with how to create and manage such a company,” he says, “and they aren’t eager to do additional bookwork, purchase equipment and software, and arrange for more staffing. Perhaps, more important, they don’t want their policyholders to know it’s the agency that’s lending them money. “But with COST, the agency encounters no additional staffing or workload. What it does realize is substantial income. COST clients generally earn between $30,000 and $40,000 for every million dollars they finance through their own premium finance company. That profit figure vastly exceeds any kind of profit sharing, override, or other revenue sharing they’d receive from an outside premium finance company. More and more agents have become aware that their own premium finance company is a ready-made profit center for their agency.” Gebhardt points out that the agency is not hassled with calls from borrowers. All correspondence and phone communication is done with COST’s personnel in St. Louis, not the agency’s. COST is a total “turnkey” approach that handles daily operations including billing, remittance processing, sending late/cancellation notices, reinstatement notices, and all bookkeeping for your finance company. In addition, COST reconciles bank accounts and lines of credit, and prepares unaudited monthly and year-end financial statements. COST supplies monthly, quarterly and annual reports required by state licensing departments. Additionally, for the protection of every client, COST carries errors and omissions and fidelity coverage, and it maintains no check-signing authority over any client bank account. “We handle all those details,” stresses Gebhardt. “That leaves the agency to do what it does best—sell and service your insurance customers.” When the Target Markets Program Administrators Association was formed, Gebhardt immediately recognized an excellent business opportunity. By joining the TMPAA membership roll, COST regularly networks with agents, MGAs and insurance companies. In fact, a large number of new clients have been attracted to COST through business relationships that developed via TMPAA connections. Gebhardt well remembers that, “… right from the association’s beginning, one of its prime objectives was to offer members a forum for communication with each other. “There’s no question that the goal has been, and continues to be, met.” * |
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