A recent Flash Composite PMI showed that the eurozone is benefitting from fewer supply and labour market constraints than the UK and US, where growth slowed sharply due to these shortages, and prices rose commensurately higher as a result1. Britain’s economic recovery, following Covid-19 and Brexit, may have slowed as companies struggle with material and staff shortages, but there are options available to help ease the economic challenges faced. Effective use of credit is one.
Dealing with shortages
Construction and manufacturing firms have had to absorb this situation more than most and face the additional challenge of limited staff and materials and the need to look at alternative ways to pay for soaring costs and every day operating expenses. Covering insurance costs, using credit is one example. In the recent Premium Credit Insurance Index, the construction and manufacturing sectors are the most likely to turn to credit to help pay for insurance2 as cashflow tightens.
Operating within a hardening insurance market has added to the financial burden across many industries. Owen Thomas, Chief Sales Officer at Premium Credit comments: “The cost of commercial insurance has been rising dramatically, and this coupled with the fact that many businesses have seen their cash flow deteriorate during the Coronavirus crisis means more are using credit to pay for their cover.”
Of the many financial obligations, a business needs to meet, business insurance is one of the essentials. Instead of opting for a credit card or personal loan to cover the cost, insurance premium finance creates an affordable off balance sheet alternative for business owners wanting to pay their premiums in convenient monthly payments, spreading the cost.
The benefits of insurance premium finance
• Improved cash flow - eliminates the requirement for a large up-front payment, freeing up the lump sum to use elsewhere in the business and avoids the need to liquidate other assets
• Complete cover - ensuring the upfront cost doesn’t lead to cutting corners on insurance cover, particularly where the business is faced with rising premiums at renewal
• Flexibility - multiple insurance policies can be attached to a single premium finance agreement allowing for a single payment plan and single direct debit, or you could use the product just to finance part of one policy allowing the business still to achieve in year budgets even with increased premiums
• Retained Capital / Off Balance Sheet Lending - by using the premium finance lender's capital, customers can retain and re-invest capital in their business through an off-balance sheet item
Improve customer care and your bottom line
The after-effects of the pandemic and Brexit will inevitably keep generating new challenges for businesses and individuals to address. When it comes to insurance cover, insurance premium finance gives opportunity to obtain vital protection, at the right price and when it’s needed. Brokers can create opportunities for business growth too by providing insurance premium finance solutions to their customer base, helping to retain and create more business.
We will be pleased to speak with brokers, insurers and MGAs wanting to enhance their customer offering and build added revenue through award winning premium finance products.