In this month’s Expert View article Adam Morghem, our Strategy, Marketing & Communications Director, outlines the increasingly important role of premium finance in what continues to be a difficult environment to run a business or manage household finances. If you’d like to find out more about the benefits of premium finance, to you as a broker and your customers, please don’t hesitate to contact me or one of the Premium Credit Ireland team.

Ger Shannon

Managing Director, Premium Credit Ireland

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?

Insurance cover

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.

Adam Morghem

Strategy, Marketing & Communications Director