RIGHT TIME, RIGHT PLACE?

With inflation up, premiums rising and risks increasing, premium funding is set to be in demand. Building premium funding options into sales processes could not only help clients, but also give you a competitive advantage.

By MARTIN WANLESS

It’s not exactly news that budgets are tight at present. And, from experience, we all know that when budgets are tight, insurance is a line item that gets scrutinised.

As interest rates and the cost of goods and services increase, premiums are increasing across many product lines, too – so it’s no surprise that premium funding is proving an increasingly attractive proposition.

“As interest rates continue to increase on the back of official cash rate rises, so too are insurance premiums across most product lines, increasing the demand for premium funding as businesses seek ways to better manage their cash flow,” says Graeme Gordon, Head of Sales – Australia & New Zealand, at premium funder IQumulate.

“With government support packages concluding post-pandemic, coupled with increases to insurance premiums across a range of products, and with the recent impacts from environmental disasters thrown into the mix, business and household premiums have increased significantly – to a point that has seen many rethink the way they spread their cash flow payments and consider a premium funding solution.”

Building Premium Funding Options Into The Everyday

Interest in and demand for premium funding has, anecdotally at least, increased over recent months – however, market education is still needed, says Chris Caruso, State Sales Manager at Elantis Premium Funding.

“Demand has definitely picked up. However, premium funders need to continue actively educating the market on the benefits of offering premium funding to every client as part of an insurance broker’s holistic service offering.

“On average, just over 35% of premiums are estimated to be funded in Australia, meaning the remaining premiums are funded by cash or other banking products.

“Premium funding frees up usage of these other banking products to give businesses the opportunity to meet other costs or reinvest back into their business and earn a higher rate of return than the cost of the premium funding.”

It’s statistics like those that attracted Shaun Quincey, CEO and Co-Founder of Simfuni to help the premium funding market. Quincey was part of the team that launched and established one of Australia’s best-known buy-now-pay-later businesses – and has launched Simfuni to help brokers and premium funders easily distribute premium funding for their clients.

“From our research, only 10 per cent or so of policy owners were being offered premium funding by brokers because the application process was viewed as cumbersome,” says Quincey.

“Our software enables brokers to offer premium funding instantly to every single client, which removes the