The old saying goes that a fool and his money are soon parted, and in this current economic crisis the same can be said for an agency principal who puts prudent business practices aside to cover a premium payment for a friend or longtime client, one leading consultant warns.
"For many agents, it's personal, not business," observed Al Diamond, president of Agency Consulting Group Inc. in Cherry Hill, N.J., who warned that agencies can get into serious financial trouble if they lend clients money to pay their premiums.
Most agencies typically do their billing in one of two ways, explained Mr. Diamond. Either they utilize direct billing from the carrier, or refer clients to a third party for premium financing–a sort of bridge loan to pay premiums over time.
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