Compliance Audits
Due Diligence

Before entering into a premium finance loan, we can work with you during the Due Diligence process to help you assess the premium finance company:

  • Are finance receivables being administered properly? i.e. are accounts cancelled on a timely basis or are they "held" too long

  • Are receivables due from insurance companies followed up on a timely basis?

  • Are fully refunded accounts written off within appropriate timeframes?

  • Are the correct fraud prevention and detection controls in place?

  • What percentage of the receivables are funded to agents? What controls are in place?

  • Are underwriting procedures in place to ensure that risks and bad debt losses are minimized?

We can review these and many other items to assess the collateral as well as the operational and financial aspects of the company .

Borrowing Base Creation and Review

We can work with you to review or create the appropriate advance limitations and ineligible receivable items to ensure that your loan is adequately collateralized.

  • what advance rate do you allow?

  • what types of policies do you place restrictions on?

  • are there certain down payment requirements?

  • which loans are ineligible?

Best Practices

Premium Finance is a complex industry. There are many important procedures and processes that need to be in place. We can review your client's procedures and controls to ensure that they are sufficient:

  • are Risk Retention Groups or fully earned policies financed?

  • appointment requirements for new agents

  • underwriting guidelines for new loans including:

    • which loan terms are approved automatically on the quoting platform and which require intervention​?

    • are there credit limits set for each agency?

    • how are certain lines of business controlled?

  • Loan funding procedures​

    • how are loans funded and who approves funding?​

    • what Verifications are required prior to funding?

  • Post Funding  Verification

    • is policy issuance verified?

    • is payment receipt verified with MGA?

  • Cancellation Procedures

    • do you review accounts prior to cancellation? What does this entail?​

    • do you allow account Holds to be placed by agents?

    • are accounts cancelled if Payment Holds were placed but not received?

    • How do you mail cancellations

  • Reinstatements​

    • How are they initiated - automatically or by agent?​

    • Payment requirements?

  • Is staffing sufficient or are they overstaffed - or is staff deployed in the correct areas?

  • We can perform periodic audits of your premium finance clients to ensure that they are in compliance with loan covenants.

  • Additionally, we can work with you to develop a program which can cover a variety of financial and operational items to ensure that the finance receivables are being managed properly. 

    • are loans funded to agents instead of Carriers/MGA's?​

    • Does your client have a comprehensive system in place to ensure that agent funded loans have been verified directly with the carrier?

    • Have premium funds been remitted by the agent to the carrier on a timely basis?

    • Are unearned premiums remitted to the agent or finance company?

    • Is your client financing unrated Risk Retention Groups; or fully earned policies? Agency fees?

  • Does your client have a system to detect possible fraud situations?

    • Is the agent making payments on a contract to the finance company?​

    • Do some agents have a large percentage of customer return mail?

    • Are customer addresses on the finance agreement verified independently?

  • What procedures are in place prior to funding a loan?

Premium Finance Consulting can provide a variety of services to financial institutions providing credit facilities to premium finance companies:​