2 Kinds of Industry Growth

In the aftermath of the COVID-19 pandemic, we have seen drastic economic fluctuations, from historically high interest rates to high inflation. How have the pressures from today’s economic environment impacted your offerings?

Our offerings provide clients with a good opportunity to create more cash flow for their business while some larger businesses use this as an investment option. Even with interest rates rising, we offer lower interest rates than clients generally receive at a local bank or their preferred banking partner; and we do it much easier, regardless of the market or inflation. Additionally, the raising of interest rates doesn’t seem to really be deterring people from taking loans. When clients need assistance, our Customer Service Contact Center is there to assist them. We’re seeing people use this as an investment opportunity because they’re getting higher returns on another kind of opportunity that they’ve put their money into.

What types of growth strategies are you seeing within the premium finance industry right now?

FIRST is focused on organic growth and seeing results of 20% in a single business year, which we are pretty excited about. However, many in our industry have pursued growth purely through mergers and acquisitions. It’s been a kind of cause and effect. During the last year several firms have been bought by our larger competitors, shrinking premium finance options a little bit as organizations are acquired. I’m sure some in the insurance agency world can understand the impact this has. Agents have an understanding of how mergers and acquisitions affect their clients. For FIRST, we’re seeing a lot of smaller companies being bought up by larger ones, and that’s also probably impacting their client relationships.

That sounds like a significant focus on acquisitions. Are there any forms of disruption that may impact clients or agency growth with so much emphasis on buying?

Premium finance, just like insurance, is still very much a relationship business—people contacting individuals. That’s where disruption may creep in and impact product offerings. Agencies may need to change some of the products and services that they can no longer provide as a result of an acquisition. The everyday operations may also become slower and more complicated. For instance, take technology, if a company merges with another, the result is a bigger company, but then the company may have to decide on which technology system it wants to primarily use for booking loans. Sometimes a merger can create more problems than it solves. There is a reason why between 70% and 90% of acquisitions fail, according to Harvard Business Review. Buying sounds like such a simple topic, but integration is what makes or breaks a merger.

Where does this organic growth come from? And what does your acquisition strategy look like?

Organic growth comes from expanding our value chain to meet clients where their needs are. We like to say that FIRST provides more than premium finance, we have complete financial solutions for not only the agency but for their insured clients as well. FIRST offers transportation solutions for insurance agents that are focused on that area of business, and also has a dedicated team providing unique solutions to firms that specialize in the construction and architecture industries. A lot of our unique solutions can be attributed to our partnership with Wintrust [FIRST Insurance Funding is a Wintrust business] that began as a series of community banks and when we started to grow nationally, they helped us. When acquiring local branches within our industry, maintaining a community focus is one of our highest priorities. One way we achieve that is by preserving local talent and leadership that keeps each particular branch unique and a contributor to it’s local community.

Can you expand more on your relationship with Wintrust? How do they put a personal spin on banking?

Sometimes if you’re banking with a large bank, it’s difficult to have a personal relationship with the bank. They’re not going to give any extra effort for you or make any special accommodations for you because you’ve been a client for 15 years—that just doesn’t happen. But at Wintrust, I think we found a sweet spot where we’re able to offer the facilities and the services of a big national bank, but we’ve kept that community feel. We even keep the community names of the banks in a lot of cases, while offering the same solutions as well as a digital platform for people to make all of their transactions. I think that’s part of what’s really helped us grow.

In terms of growth for FIRST Insurance Funding, what are your strategies? Your website indicates you went from $1 billion in loan volume in 2001 to $14 billion in 2023.

We attribute our organic growth to the strength of our technology and our consultative relationship approach. We have 35 relationship managers across the nation that are supported by dedicated servicing teams with flexibility and deep expertise. Our strategy is to invest in our teams, in our technology and infrastructure and to continuously seek and act upon feedback from all users. This allows us to create new products and services that our clients will value. In addition, excellent customer service is at the top of our priority list. We have a policy of “just ask,” meaning let’s work together to find a solution that works for everyone. Lastly, we could not achieve such loan volume without the financial muscle of Wintrust, with over $57 billion in assets. Our tie to Wintrust allows us to offer our partners complete financial solutions. We can provide perpetuation and acquisition lending, treasury management solutions, corporate plan services, capital leasing, and life insurance premium financing. Our partnership with Wintrust creates a variety of options and opportunities to understand how to serve independent, middle- to upper-market insurance agents, brokers, and their business clients, and we can provide a full range of services that other premium financing companies struggle with.

What’s your approach when catering to unique policies and services for clients?

That’s one of the things that really sets us apart: FIRST has both breadth and depth of expertise enabling us to create unique solutions for evolving financing needs. Ultimately, we are hoping when agencies work with us, they begin to think of themselves as consultants to their clients. We want to provide them a clear path for differentiating themselves from all the other agencies that offer the same policies. I mean, they’re always looking for an edge, right? Even with the advancement of technology, people are still craving that personalized touch. They want the convenience of the tech, but they also want to make sure they’re not missing out on anything.

Are there any shifting client demographics that are impacting your business?

FIRST deals mostly with commercial clients for their business-related insurance policies, but we’re seeing a rise in financing for captives and program administrators as well as financing for specialty lines of coverage that require unique terms or considerations such as trucking, condos in Florida, and cannabis-related businesses. In addition, we have to be nimble in response to natural disasters and emergency situations that unfortunately, we are seeing more frequently.

What’s a policy topic within the premium financial markets that you believe still needs to be fleshed out?

Finding solutions for cannabis-related businesses. This is a newer market with clients in need of financial solutions, and we’re seeing it trickling down to us. There are issues with banking as well as finding coverage for those clients. However, we’ve seen a lot of change around the opinions and notions of that industry in the last few years. As a result, we are in the midst of launching a new product to provide financing for those businesses. We aim to manage the compliance and regulatory challenges by leveraging a relationship with a specialized compliance company that has deep cannabis banking experience. In this way, we keep our agencies and FIRST Insurance Funding out of harm’s way.