What is premium finance?
Premium finance is a facility that allows commercial policyholders to spread the cost of their insurance cover over the policy period. After the client has entered into a simple finance agreement, the premium finance provider pays the insurance premium to the broker in a lump sum then collects the repayments, plus interest, from the company. The repayment plan normally consists of a down payment - usually 10% of the policy premium - followed by regular monthly, quarterly or half-yearly instalments. Variable terms are often available.
Benefits to you, the Broker
Premium finance can help you grow your business through:
Improved customer service
By offering competitive loans and flexible payment plans, you can accommodate both your clients' insurance and financial needs, resulting in greater customer satisfaction and retention.
Additional income
Commission from the premium finance provider can generate a valuable new revenue stream for your business.
Fast commission collection
Quick payment at the end of every month means you receive your commission sooner rather than later. Alternative commission payment schedules are available.
Reduced administration
Premium financing cuts down the administration and overheads associated with premium collection allowing you more time for selling.
More transparent accounting
Accounting is made easier through fixed payment dates and the ability to track your clients' accounts electronically.
Risk Transfer
The risk of collecting the payments and handling defaults moves to the premium finance provider And there is no co-mingling of your client's funds.
Back to top
Benefits to your clients
Your clients will benefit in several ways:
More affordable insurance
Clients who need large amounts of insurance coverage or prefer to stagger their premium payments can secure finance at attractive rates.
Improved cash flow
Spreading the cost of their insurance cover gives clients greater control over their cash-flow by regulating their outgoings.
More working capital
Not having to pay the full year's premium in one lump sum frees up money that can be reinvested in the client's business.
Consolidated insurance payments
Premiums from multiple policies can be combined into one regular monthly payment that becomes part of the client's budgeting process.
Rapid turnaround
Documentation is straightforward and loan applications can be processed the same day.
Certainty of repayment terms
The repayment amount always has a fixed term and a fixed rate, enabling clients to budget more confidently.
Flexibility
A client's existing credit arrangements are not affected by a loan and there is no maximum limit on the amount of premium that can be funded.
Renewals made simple
The renewal process can be simplified through rolling agreements that eliminate the need for further paperwork at each subsequent renewal.
Tax-deductible interest
In most cases, interest on installments is tax deductible.
Back to top
|
