Bexhill UK CEO Ravi Takhar said the problem was that brokers were still charging very high interest rates to customers. 

He stressed every customer is different, but in many cases, there is a disconnect between the high interest rates being charged and the actual risk of non-payment from the customer.

Full article >

re you looking for funding options to take your business to the next level? Look no further than the BexhillUK Funding stand at BIBA Manchester!

Our team of experts is ready to help you explore a range of finance solutions tailored to your business needs.

At BexhillUK Funding, we understand that securing funding can be a daunting task, especially if you're not familiar with the options available. That's why our team is dedicated to providing clear, straightforward advice to help you make informed decisions about your business finance. Whether you're looking for invoice finance, asset-based lending or trade finance, we have the expertise to help you find the right solution.

When you visit our stand at BIBA Manchester, you'll have the opportunity to meet our team, ask questions and learn more about the finance options available to you. We'll take the time to understand your business needs and help you explore a range of funding options that could help you achieve your goals.

So why wait? Come and visit us at the BexhillUK Funding stand at BIBA Manchester and take the first step towards securing the funding you need to drive your business forward.

#biba2023 #insurancebroker #BIBAbroker #premiumfinance #financesolutions

This is the first time the FCA has created rules which could impact on the levels of premium finance remuneration earned by insurance brokers. The new rules come into effect on 1 January 2022.

Limitations on premium finance remuneration

ICOBS 6A.5.5 R states that a firm must not arrange any retail premium finance where this would not be in the customer’s best interests.

Brokers may need to ask themselves the following questions.

1. Is the premium finance rate in the customer’s best interests?

2. Is there a conflict of interests resulting from the commission earned on the premium finance and the best interests of the customer?

3. How does the premium finance arrangement selected provide a fair outcome for the customer?

4. Why was the premium finance arrangement selected for the customer?

Broker A earns 15% commission from offering premium finance to its customers through a premium finance provider. The insurer’s instalment facility offers an Annual Percentage Rate (APR) of 10%. On the face of it, Broker A may not be acting in the best interests of its customers and may wish to consider reducing its commission.

Broker receives all its commission in advance from a premium finance provider either as a direct payment or in the form of marketing or training allowances. A potential conflict of interests may exist between the broker offering premium finance to hit a target and so retain the commission and the best interests of its customers.

Pre-contract disclosures

ICOBS 6A.5 R makes it clear that customers must receive information about:

1. The total cost of the policy without premium finance;

2. The total cost of the policy with premium finance;

3. The cost of the premium finance ie 2. MINUS 1.;

4. Notification that the use of premium finance will be more expensive than paying for the policy upfront;

Any difference between the duration of the policy and that of the premium finance.

Fair value

Firms would be breaking the fair value requirements were they to increase the price of insurance products because the customer is purchasing the policy using retail premium finance, unless the firm has an objective and reasonable basis for making the change.

ENBP and premium finance

When ensuring the price of the premium finance at renewal is no higher than ENBP, the relevant measure is the APR if the premium finance is a regulated credit agreement or, the total price paid by the consumer if it is not.

Reporting

The Supervision Sourcebook (SUP 16.28.13 R) contains the new rules relating to premium finance reporting. Firms will be expected to report (on form REP021):

1. Total charged for retail premium finance on policies written in reporting period.

2. Total number of policies with retail premium finance written in reporting period.

3. Total number of policies written in reporting period falling into bands of APR rates from 0% to 50% or more.

Non-retail premium finance

All premium finance offered to non-retail customers ie firms of three or more partners or limited companies does not fall within the new FCA premium finance rules.

Ravi Takhar

CEO

Bexhill UK Ltd