Insurance premium finance - a win, win
Authored by Adam Morghem, Strategy, Marketing & Communications Director, Premium Credit
Over the last few years life has changed significantly for us all. A series of landmark events including Brexit; Covid 19; Tech advancements; climate change and ongoing international trade wars have impacted the way businesses and individuals’ function.
Adapting to change
Society has had to quickly adapt to a wide range of challenging situations and circumstances - mitigating risk has never been more important. Within this complex scenario insurance continues to play a critical role in protecting business, commerce and the population in general but is the right cover being taken, at the right levels and is it affordable?
Having inadequate or no cover can prove costly as many have found out. The 2021 Premium Credit Insurance Index showed that almost one in ten SMEs (9%) and 14% of consumers have, in the past five years, not been able to claim for damage because they were not insured or were underinsured.
For a business, working closely with a broker ensures all risks are identified and an appropriate insurance programme is in place to protect them should the unthinkable occur- and this comes at a cost. So what options are there?
A growing role for premium finance
Whilst paying in full is available, premium finance is an increasingly attractive option for those personal customers, SMEs and corporates who are looking to better manage the cost of buying insurance. Generally, the market sees 1 in 5 customers selecting premium finance to pay monthly for cover instead of in an annual lump sum – and this is growing as premiums in many categories are rising. It’s an accessible, competitively priced payment option compared to other forms of credit enabling customers to preserve working capital and ease cash flow.
Opportunities for business development
The use of premium finance is increasing in both personal and commercial lines insurance with growth being driven by the fallout from Brexit, Covid-19, and better offer rates at brokers. We integrate our technology into partners to compliantly offer finance, and typically see penetration rates of over 40% with our partners in the personal lines market, and 25% plus for those working in commercial lines insurance. Our approach ensures great customer outcomes and provides significant business development opportunities for brokers, insurers and MGAs.
As well as increasing payment options and customer choice, intermediaries receive a percentage commission for every new credit agreement they set up for their customers choosing to pay in this way. Insurers and MGAs receive their full premium upfront in a timely manner, rather than having to collect from the customer through the policy year or account for delays in payments. It’s a win, win situation for all involved.
Whatever the future holds, premium finance remains a strong option for those wishing to acquire insurance and a business development opportunity for those supplying cover.
If you would like to talk to Premium Credit about their Premium Finance proposition, CLICK HERE, leave a message and youTalk-insurance will pass your enquiry on
About Premium Credit
We are the leading provider of premium finance in the UK and Ireland, and the only company endorsed by BIBA.
We are authorised and regulated by the Financial Conduct Authority, and work with over 3,000 producers of all sizes. We serve over 2.1 million customers, process 24 million direct debits and receive advances of £3.5 billion.
For over 30 years, we’ve led the market through thought leadership, innovation and technology and have helped our partners offer finance compliantly to their customers through face-to-face, telephony and online channels.
We continue to invest to ensure we provide a quality service and support that helps you grow your business and commission. From the delivery of a seamless customer journey, which includes real time decisioning for financing and 24/7 account servicing, to consultation that improves the offer of finance to customers, we are committed to growing the premium finance market.
Our Specialist Lending division also provides finance to pay other annual costs, such as professional fees, membership subscriptions, commercial service charges, golf clubs and school fees.
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