Premium Finance

Welcome to the 2005 Professional Broking Premium Finance supplement, sponsored by aascent Finance Company.

Since publication of the last supplement on the subject, one year ago, some momentous changes have taken place. While the premium finance market has experienced some contraction itself, the advent of regulation under the Financial Services Authority has placed the way in which brokers handle client money firmly in the spotlight.

Also, since last year, the advance of specialist third-party providers, hungry for market share, seems to have prompted some insurers to value their own credit facilities more. While this makes the Holy Grail in premium finance for specialist firms - to administer schemes on behalf of insurers - unlikely, this is far from a foregone conclusion. Many specialist providers are owned by huge parent companies that are not likely to give up easily.

Nevertheless, for insurers, despite credit facilities not being a core function, receiving payment consistently throughout the year aids cash flow and generates additional income. This makes conceding ground through outsourcing unlikely but, with third-party premium finance providers often offering greater flexibility and cheaper deals than insurers, the credit market remains a hotly contested one. So, while, on the face of it, the market may seem static, much effort is being made to woo brokers on both sides, the details are of which are further aired and evaluated in the pages of this supplement.