Premium on Change
Company general counsels have often been known to figuratively deal with emergencies and put out fires, but it isn’t often that you find one who has literal experience with both. John Lippincott, the General Counsel of US Premium Finance, worked as a Paramedic and firefighter in both metro Chicago and Atlanta in the early part of his career. “I keep my fireman’s hat in my office to remind me of all the experiences I used to have,” he says, “it’s a big change from what I do today.”
Born in a suburb of Chicago, John worked as an EMT and paramedic there after graduating college from Tulane University and later moved to Georgia where he worked for the Clayton County Fire Department. “I have nothing but good things to say about my time with the fire department in Clayton,” he says. “I once delivered a baby on a kitchen floor. Most people don’t realize that a majority of a firefighter’s job is helping in emergency or medical situations and not fires.” While helping the sick and those in immediate need was the larger part of his job, John did deal with some fires. “I worked on fairly large apartment complex fires,” he says. “One of the biggest jobs in putting out a fire, that most people don’t think about, is the amount of time we have to spend making sure the fire is completely out. You don’t want it to rekindle.”
While being part of a team that helped people in some pretty bad situations was satisfying, John began to feel that it was time to try something else. “You are as high as a kite in an adrenalin rush during an emergency, especially if the results are good, which they usually are, but I was getting older and being on call for 24 hours straight began to lose its appeal,” he says. “Also, my wife and I were going to have a baby, so I knew that I needed to transition into a profession that allowed me to be at home every night. I knew it would be hard and, frankly, it came down to whether or not I have the courage to make the change.”
At the age of 31, John entered the Georgia State University School of Law, attending part time while continuing to work full time for the fire department. “It took me four years instead of three, but it was the only way I could do it and support my family at the same time,” he says.
John’s first job out of law school was with Jenkins & Olsen in Cartersville, Georgia, where he did a lot of plaintiff’s work, insurance defense and quite a bit of work for Bartow County. “The partners were great mentors to me and I learned a lot,” he says. “At the beginning of a legal career, a good paralegal can teach a new attorney a lot,” he says, “and I learned a lot from ours about the mechanics of the court and filings.” Very soon, John began handling motions and trying smaller cases on his own. “I also went to court representing the County in code violation cases, which was good experience,” he says.
A generalist throughout his entire career, John worked for several companies and firms in Atlanta before being asked to join US Premium Finance as its General Counsel in 2016. “In my first interview I was asked what I knew about premium finance and I had to admit that I knew nothing but what I had Googled,” he says.
The business of financing insurance premiums has been in existence for more than 50 years and provides premium finance companies with a safe and consistent return on capital. A variety of banks provide revolving credit facilities to premium finance companies that are secured by the underlying premium finance receivables. There are estimated to be more than 1,000 licensed premium finance companies nationwide. However, a handful of commercial banks, either directly or through premium finance company subsidiaries, control a large percentage of the $30 billion in commercial premium originations.
US Premium Finance, where John began working in October of 2016, is now a division of Ameris Bank. Based in Atlanta, it is the sixth largest insurance premium finance company in the country, providing commercial credit lines for property and casualty insurance premiums. With clients and operations in all 50 states, US Premium Finance has over 1,000 insurance agency-customers and over 25,000 borrowers.
“The industry exists because in the commercial insurance market, the insurer wants the entire year’s premium up front,” says John, “and the annual premium for a large company can be millions of dollars.” For cash flow purposes many companies, even very large and successful ones, want to finance the premium over time. “In a typical agreement, we may ask for 20% of the payment down and we then finance the rest over 7 to 10 months. The insurance company gets the entire yearly premium and we collect payments with interest from the insured. It’s a nice business to be in,” he says.
“Our client is the insurance agency, not the insured,” says John. “The agency keeps the portion of the premium that is their commission and then forwards the rest to the insurance company.”
Under the terms of the finance agreement, and as provided under state finance statutes, the premium finance company has a lien on the insurance policy and has the right to cancel the insurance policy in the event of a default by the borrower under a granted power of attorney. Upon cancellation of the policy, the insurance carrier, which was paid the total premium at the inception of the policy, must refund the unearned premium to the finance company.
“The amount of money we make on each financing deal depends on many variables, such as time in business, and previous pay history, as determined by our credit department, which works as an underwriter does, but much, much more specialized.”
In his job as general counsel, John handles compliance with all state laws and regulators. “Premium financing requires licensing in some states and in some states it doesn’t, and I have to keep up with all of that,” he says. Some states, like New York, have heavy regulation and some, like Nebraska, have zero regulation. Since we do business in all 50 states, I keep an eye on them all.”
The company has its heaviest volume in New York, Georgia, Florida and Pennsylvania.
And, of course, problems do come up from time to time, frequently landing on John’s desk.
For example, if the company has financed a year-long premium but the insured stops making payments after six months, the insurance company is supposed to return the unused portion of the premium to US Premium Finance. “They sometimes don’t want to return the unused premium to us and we have to sue just to show them that we are serious,” he says.
Other times, the payments are paid in a timely basis, but the insured makes a claim against the policy and the insurance company does not want to pay for some reason. “We are sometimes brought in as a party and have to deal with it,” he says.
Once in a while an insured goes bankrupt and the Trustee in Bankruptcy tries to “claw back” the premium payments made. “This isn’t allowed,” says John, “but we have to go to US Bankruptcy Court to fight it.”
US Premium Finance is headquartered in Atlanta and is a subsidiary of Ameris Bank, of Moultrie, Georgia. Pending regulatory approval, Ameris Bank will merge with Atlanta based Fidelity Bank, and the combined institution will be known as Ameris Bank.
“I enjoy my work here at US Premium Finance and believe the future is bright,” says John. “The industry continues to grow, and we will grow with it,” he says. “Being a fireman was great – I wouldn’t trade the experience for anything – but I’m very happy that I made the change to law.”
Married for 23 years in August, John and his wife Victoria have one son, Michael, who was born during exam week of John’s first year in law school.