Financing Risk Retention Groups and Unrated Carriers
In the world of commercial insurance, you are almost certain to run into a Risk Retention Group (RRG), a liability insurance company owned by its members, or an unrated carrier, one that does not carry an insurer ‘financial strength rating’ given by a rating agency like A.M. Best. Both can pose challenges when it comes to insurance premium financing.
While RRG’s and unrated carriers are slightly different types of entities, they both need special attention when financing their insurance premiums. First, you need to check with the finance company to see if they have already approved the RRG or carrier in question. If so, you should confirm that the finance company has sufficient capacity to finance your account(s).
If the finance company has not approved the RRG or carrier, then you will need to have them become approved before you can finance the premiums. This will likely entail having the RRG or carrier provide a complete set of financial statements or their “Yellow Book”, which is the annual reporting forms used to file with the state insurance departments, to the finance company. The finance company may possibly ask for a narrative about your accounts or program that you will be financing and may also ask to speak with the CFO or other knowledgeable party at the RRG or carrier in order to determine what, if any, capacity amount the finance company might be willing to approve.
While the approval process may not be quick or easy, don’t let that deter you from considering financing the premiums in these cases. Our experts at Premium Finance Brokerage (PFB) can help you every step of the way! Just contact your PFB Sales Executive or contact PFB home office at: email@example.com or 866-381-6501 and we will be more than happy to guide you and make the process less challenging.