Two years ago, we announced the launch of Applied Pay​®, the industry’s only AMS-native payments solution that helps you automate your financial management​ while giving your clients a simple payment experience. The framework we use to drive the Applied Pay roadmap is C.A.R.D – Collect, Apply, Reconcile and Disburse. This year, among other great improvements, we’ve focused on expanding the ways you can Collect payments​. I’m excited to share that we’ve integrated Applied Pay with leading premium finance companies to deliver advanced financing options at checkout.

Before I explain our embedded premium finance solution further, let's make sure you understand the basics of premium financing.

What Is Premium Finance and Why Is It Important to the Insurance Industry? ​

Financing premiums is a convenient way for insureds to pay for their business policies, as it spreads the cost out into monthly payments rather than requiring a large sum upfront. It’s such a great option because it allows insureds to get the right amount of coverage for their needs when the premium could be cost-prohibitive​. It can also serve as a solid profit center for the agency. Studies indicate clients are more likely to purchase higher-value policies or add-ons when the financial burden is spread over time.

However, because the workflows around financing require multiple steps and stakeholders, they’re often time-consuming and prevent insureds from reaping the benefits. In fact, the percentage of agency bill policies that are financed has remained at 15% for over 10 years despite advancements in digital capabilities​. Why has growth in payment financing remained flat despite being a great offering for the insured and a strong growth lever for the agency?​ Because it is highly complex and requires tight collaboration with the insured, agency, AMS, and premium finance company​. But Applied has invested to solve this complex puzzle for you!

We’ve partnered with AFCO Direct, FIRST Insurance Funding and Imperial PFS to deliver industry-first automation across premium finance workflows that will benefit your insureds and your bottom line. With Embedded Premium Finance for Applied Pay, insureds can solicit financing and sign financing agreements, with immediate approvals and upfront terms, while paying premiums online. An insured-led workflow for premium financing with no agent intervention on loans up to $100,000 reduces complexity and time for all stakeholders while delivering insured customers more control over their payment options.

How Does the Applied Pay Solution Differ from Others?

Embedded Premium Finance for Applied Pay is the only solution that integrates with more than one premium finance provider and is natively integrated with the agency management system. This means you can offer your insureds one or multiple financing companies at the time of payment and then leverage automation of back-office tasks with tight connectivity to Applied Epic®.

Our solution provides a core set of capabilities, including:

• At-Payment Financing: Insureds can review and eSign financing agreements and make initial down payments without leaving the Applied Pay checkout page, decreasing the need for multiple rounds of conversation and document iterations while giving insureds greater control of their payment options. 

• Flexible Financing with Invoice Consolidation: Insureds can solicit financing on a single large premium or multiple combined invoices to fit their financial needs. 

• Funding Activity Communications: When financing is secured, funded status information is automatically distributed to all stakeholders, keeping the agent, insured, and premium finance company updated without manual intervention.  

• Auto-Apply Payment Credits to Management System Debits: Deep integration between Applied Pay, Applied Epic, and each premium finance company facilitates the seamless application of premium payment to the correct transactions on the insured's account in Applied Epic, saving agents time and reducing errors that come with manual reconciliation. 

How Does Embedded Premium Finance Work?

Now that you know about the capabilities, let’s put them into action with a sample scenario.

The insured receives an email or text message with an embedded payment link to the Applied Pay payment page. Here, they are presented with two very clear options:

Option 1) Pay their premium in full using ACH or a credit card.

Option 2) Select “Pay with Financing” and be presented with a financing agreement right there on the spot.

Following the configurations set up by the agency, each transaction that meets the decided-upon criteria is approved on the fly, removing all the back-and-forth conversations that were previously needed to obtain approval.

From there, the insured simply needs to select the Finance option, open the agreement, review the payment terms (which include both the down payment and monthly installments) and sign with a digital signature. All of this happens instantly and is displayed in clear detail right there in the payment flow, giving insureds confidence and clarity around the entire process.

The insured then confirms their payment information and clicks submit, which completes the transaction by capturing the initial down payment (plus any additional premiums they may be paying in full) and sends the financing details to all parties.

The selected premium finance company then receives the down payment, signed agreement and payment terms and issues the agency a credit back on the full amount, allowing the agency to close out the transaction receipt and finalize the payment to the insurer.

As you can see, this new process makes financing way faster and easier for all parties involved.

What’s the Value of Embedded Premium Finance?

Simply put, natively integrating financing as a payment method in the insured checkout workflow provides easy financing options for policyholders and increases financed premiums for your agency. But the advantages don’t stop there.