A series of niche providers have joined the big two. So brokers have more choice, but just how would you choose between them? Francis Higney reports
You could be forgiven for believing that what brokers want from premium finance providers is a selection of CDs and DVDs and even apple pies judging by some providers' marketing campaigns.
There is no doubt premium finance comes some way behind brokers' relationships with their clients and insurers in terms of priorities, but it is one that is becoming more significant and one where choice is expanding as new entrants have come into the market.
So what do brokers want from their premium finance providers and what should providers be doing to differentiate themselves in an increasingly crowded marketplace?
That's what one provider, Singer & Friedlander Insurance Finance sought to discover when it commissioned Signum to produce a survey on premium finance use and attitudes among a random selection of insurance brokers.
Singer & Friedlander Insurance Finance chief executive Ian Jerrum says: "It wasn't surprising to discover through our research that competitive rates came out on top as the main driver for brokers choosing a premium finance provider. What was more surprising, however, was that good levels of service combined with flexibility when added together scored higher than a competitive rate.
Biba chief executive Mike Williams agrees: "Efficiency and the relationship between the premium finance company and the broker - whether or not the PF company actually responds quickly and positively to proposals count just as much as price.
"When brokers say they want good levels of service what they mean is that they want delivery on promises. It's not so much a question of getting back to the broker in a certain time, but sticking to the time when you say you will get back to them, be it an hour a day a week or whatever.
"It's not rocket science, it's going back to fundamentals," adds Jerrum.
Good systems
Of course, all are looking for very competitive finance rates but they also want to see speed and reliability of service.
"The two important things for brokers as far as premium finance is concerned are efficiency and very good systems. Most of the PF providers claim they can integrate into broker software house systems seamlessly. Most brokers will tell you that is a pipe dream," Williams asserts.
"There are one or two who do reasonably well, but the systems do not at the moment exist to do the job effectively for the brokers. There is still a lot of paper-driven work being undertaken."
BigFish, a new product launched by Benfield, points to its fully automated systems-driven approach as its major selling point. Targeting personal lines and small and medium-sized enterprise business, BigFish has already set up a deal with broker software house Software Solutions Partners (SSP). Brokers can access BigFish products automatically via the SSP system, and cut out dual keying.
"Machines don't make mistakes, people do," say sales director Ian Woodley. "We won't deal on a manual basis. Our functionality is embedded within the software companies system and we take a copy of the original document leaving the broker with zero administration."
BigFish has won deals with Misys, Sirius and CDL Group, giving access to 5,000 brokers.
Technology can be viewed as one provider differentiator because it enables effective service.
However, the relationship between the broker and the premium finance provider is also important, especially where brokers may be looking for a special rate, for example.
"Brokers like to be visited by account managers. If they have a query they can discuss it face-to-face and a number of premium finance providers don't have that many on the road," adds Jerrum.
"As chief executive, I make sure I go out to speak to brokers, because we are more likely to find out the truth about how our company is perceived."
The Aascent Finance Company deals with commercial brokers only. It rose from the ashes of Tifco and claims to be the only premium finance provider that is made up of insurance people.
Service standards
Sales and marketing director Simon Horswell says this gives it an edge because "we know how the insurance industry works and better understand the broker - client relationship".
He is unimpressed when other market players' talk about service standards.
"The service brokers are receiving is average to say the best," he says. "The fact that lots of providers use the internet to process deals is not an advantage in itself."
He believes brokers should guard against doing the premium finance providers' work for them through endless form filling and data exchange.
Aascent seeks to add value by training the broker on how to sell the concept of premium finance to commercial clients.
"Personal lines is more commoditised, but with commercial the concept of premium finance has to be sold. We train brokers on how to answer the questions that finance directors of firms will throw at them."
This seems a sensible course of action for a provider to take. However, according to the Singer & Friedlander survey, 70% of the sample said they did not require additional promotional tools. Among those who said they would like help with promotion, the materials most required leaflets or flyers in plain English.
Can do, part of Cox, is a relatively recent entrant into the premium finance market. It concentrates on servicing smaller brokers by providing tailor made schemes.
"We trade on the good relationship that brokers have had with Cox for years," says sales director Andy Martin.
He also cites ease of administration - especially when things go wrong.
"We operate both recourse and non-recourse schemes. But our non-recourse product is exactly that - we take on all the debt. Others say they are non-recourse, but effectively operate a profit pool where commission is held back and the bad debt taken out of it."
Woodley says that even with such schemes brokers can still lose out because of the interest rate charged and reduced commission.
But brokers need a good reason to switch provider. The Singer & Friedlander survey revealed brokers cited 'historical' as the reason for use, having selected a company when they first decided to offer premium finance and remaining loyal to the same provider ever since.
Comparative quotes
Fifty eight per cent of the sample had no experience of other providers, which would indicate a high level of company loyalty to incumbent providers - or inertia on behalf of the broker.
Every time there is a premium to be financed, brokers do not appear to act in the same manner as they do in the insurance market where they hunt around for comparative quotes.
That's partly because most premium finance provides are looking for a guarantee that they are the preferred partners for a broker's book of business. It is very volume driven.
That throws up an interesting point of whether or not brokers should be obliged to shop around for their clients for the best deal.
Williams says: "I think that because premium finance is such a sensitive subject that when you have found a decent provider who is both efficient, competitive and supportive then it's natural to stick with them. But it does beg the question: 'Is there something better for the client out there?'"
Recourse or non-recourse premium finance
This determines who picks up the tab should a client default on payments. In the recourse scheme the broker is held liable and must make payments in place of the policyholder. In non-recourse schemes the provider takes on the debt. This can be arranged in a number of ways including some kind of pooling arrangement or fees adjustment. Rarely is it straightforward.
Premium finance providers
AASCENT FINANCE CO
Tower 42, 25 Old Broad Street, London, EC2N 3HN. Tel: 0800 389 5104
www.aascent.com
AMBER CREDIT
Amber House, Chineham Business Park, Basingstoke Hants, RG24 8QY
Tel: 01256 348 348
www.ambercredit.co.uk
BENFIELD PREMIUM FINANCE
Abbey House, 25 Clarendon Road, Redhill Surrey, RH1 1QZ
Tel: 01737 852 246
www.benfieldpremiumfinanc .
CAN DO PREMIUM FINANCE
Library House, New Road Brentwood, Essex CM14 4GD
Tel: 0870 420 5439
www.cox.co.uk
CLOSE PREMIUM FINANCE
21st Floor, Tolworth Tower Ewell Road, Surbiton,
Surrey, KT6 7EL
Tel: 0870 241 3420
www.closepf.com
FINSURE
Crown House, 145 City Road London, EC1V 1LP
Tel: 0207 656 6253
www.finsure.co.uk
PREMIUM CREDIT
60 East Street, Epsom, Surrey, KT17 1HB
Tel 01372 748 833
www.premium-credit.co.uk
PREMIUM FIRST
Arnott House, 12-16 Bridge Street, Belfast BT1 1LU
Tel: 02890 269 866
www.premiumfirst.com
SINGER & FRIEDLANDER INSURANCE FINANCE
Yeoman House, Parsonage Square, Church Street, Dorking, RH4 1UP
Tel 01306 872 666
www.sfif.co.uk
