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According to MPF CEO Raj Nanra, premium funding is a useful tool for many insurance buyers who have issues with cashflow or reinvestment allocation, and the acquisition will allow more brokers to bring the solution to their clients.
“We work with brokers whose clients have received their insurance quotes, but either have cashflow challenges or decisions around where they invest their money, which means they can’t pay the full premium upfront,” Nanra told Insurance Business.
“What we will do is pay that premium upfront, and then allow the client to pay it back over a 10-12 month period. It’s a mechanism to ease cashflow, or if a business has an economic choice around reinvestment, it gives them flexibility around how to manage the balance sheet.
“For us, it’s important that this is a part of the insurance cycle rather than just another loan, and it often helps clients make the right decision around how much coverage they need to take out in an insurance policy.”
Nanra says there has been a decent take-up of premium funding across Australia and New Zealand, but that MPF’s strategy in working with Steadfast will be to raise the product’s profile and allow even more advisers to have that offering for their clients.
“We have a very solid business foundation, and one of the reasons we’re coming on board is to expand where we can take the business in the future,” he stated. “Our key ethos will be around how we can work closer with the brokers and provide them solutions that their clients can use to make the right coverage choices.”
“We’ve been in a joint venture with Macquarie Pacific Funding for over 10 years and it’s been very successful, so we’re continuing to support each other,” Steadfast Group managing director & CEO Robert Kelly added.
“There comes a time where two partners think about the best option to take the business forward, and since we focus on the distribution, it became clear that we should be the ones to do so.”
“Roughly 30% of any broker’s business would be premium funded,” he stated. “It really helps them out by giving them an easily accessible line of credit, so a lot of clients will choose to do it over a six-12 month period. We’ve already done loans of up to $30 million.”
“I have absolutely no doubt that CEO Raj Nanra and his team will continue to enhance their service offering and provide innovative premium funding solutions for brokers and their clients.”
