How Premium Finance Can Help You Optimise Your Use of Capital

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Premium finance is essentially a different approach to paying for insurance. The client borrows (at an exceptionally low rate) the premium amount from the premium finance provider.

The funding mechanism allows corporate and commercial clients to enjoy the benefits of annual insurance policies, while ensuring that the upfront payment requirement does not impact their cashflow.

Premium finance benefits, corporate & commercial brokers

There are four main benefits we focus on when discussing how premium finance benefits brokers.

First Benefit

First and foremost is the financial benefit. Premium Finance offers brokers more security as they receive their full annual fees and commissions upfront.

Second Benefit

Secondly, Premium Finance has a positive influence on client retention as financed clients are less likely to transfer to other brokers during the term of the policy.

Third Benefit

Brokers also benefit from reduced administration demands. For example, Fulcrum’s Premium Finance clients know they can trust us to handle their debit orders and credit control.

Fourth Benefit

The fourth benefit is the Forex capabilities of premium finance. Fulcrum can assist in the financing of premiums placed in both local and foreign markets.

Is premium finance worth it for businesses?

In today’s challenging economic climate, many corporate and commercial businesses are approaching insurers to reschedule their annualised insurance. Typically, Premium Finance is a cheaper alternative in relation to obtaining funding from your current banking facility.

Premium Finance frees up cash flow for reinvestment operations and also facilitates leverage at attractive, sustainable rates. It effectively works as an alternative to a bank facility, enabling businesses to leverage off an independently managed balance sheet while claiming considerable VAT refunds and benefits at the start of the year. This frees up further capital and generates substantial time and cost savings.

Premium Finance is considered a more affordable and practical way of packaging an entire insurance portfolio, particularly those that are sizeable and complex. It enables multiple lines of annual insurance from numerous insurers which can be financed and repaid with a single monthly debit order. This reduces the administrative burden and costs. Furthermore, Premium Finance is much better than rescheduling directly with the insurer as the cost is typically a lot cheaper than the additional premiums charged by insurers when converting from annual to monthly.

Fulcrum is the largest independently owned provider of Premium Finance in South Africa. The long-standing relationships we enjoy with brokers and clients is built on trust, service and expertise that is unparalleled in South Africa’s Premium Finance industry. People trust us to finance more than R800 million in premiums every year which we see as an endorsement of our values, efficiency and service.

With Fulcrum, the process of initiating a Premium Finance facility takes no more than 24 hours so chat to us today to find an optimal solution.

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    How do brokers decide if Premium Finance is right for their clients?
    Brokers should consider Premium Financing for all their clients that have sizeable or complex insurance policies.