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Assurant - Premium Finance Survey

The Financial Conduct Authority (FCA) have voiced concerns around premium finance products. Whilst they describe it as an “essential product” that allows those who may be unable to afford cover to make monthly payments, it also has been called a “poverty premium” as the overall premium paid is actually higher.

The FCA expressed they were “very concerned about the additional cost” for consumers that opted to use premium finance, the credit risk that is charged and the very limited credit risk when it comes to these products.

Assurant provide the premium finance product for the distribution of home insurance products through the Assurant Intermediary panel. 

We conducted a survey amongst advisers to understand their views on the premium finance market, the wider use of premium finance by advisers and their experience with consumers in with their view towards the product.

The key findings are shown below or you can follow this link for the full responses.

Since our survey took place, Which? have also recently published their own researched and have urged the FCA to take urgent action against insurers that are charging monthly payment customers the highest levels of interest. 

One key area of concern from our survey is that 59% of the advisers that responded are offering premium finance to their customers without having the credit broking permissions to do so.

This is a danger as the firm must have the correct permissions to offer credit to customers entering into this type of agreement.

Assurant have previously communicated that adviser firms need the necessary credit broking permissions from the FCA to be able to offer premium finance products.
More information about common misunderstanding on consumer credit permissions can be found here

      KEY FINDINGS

  • Premium Finance is a product advisers and customers need when taking home insurance cover:
    - 86% of advisers need premium finance options to meet their customers needs
    - 68% always offer premium finance as an option to every customer
    - 77% said they felt premium finance added value to the overall proposition

  • Advisers and customers understand there is additional cost when taking premium finance.
    - 86% of advisers state budgeting decisions by the customer is the main reason for taking cover
    - 68% believe that it is not specifically selected by financially struggling clients

  • 77% of advisers do not have concerns about premium finance products in the market, For those that do, the cost and interest being charged is the main issue.
    At 7.5%, the cost and value of the Assurant premium finance product is good and competitively priced in the market in comparison to other premium finance products.

  • Advisers generally know of any premium finance providers that charge customers for missed or cancelled payments with 80% of them aware of this.
    Assurant do not charge for missed or cancelled payments if premium finance is taken which is not necessarily the case for other premium finance providers.