Premium Funding

How it works

A premium funding company pays your insurance premium to the insurer in full. You then repay the funder in instalments, usually over 12 months, with interest and fees on top.

The funding contract is between you and the funder. It’s separate from your insurance policies. We arrange it on your instructions, but we’re not the lender and we don’t decide whether your application is approved.

The things people are often surprised by

Each year is a new loan. Funding doesn’t automatically continue from one year to the next. A new contract is created at each renewal, with a new amount, a new rate and new fees.

The funder holds security over your policies. Funding contracts normally give the funder a power of attorney over the policies being funded. If you fall behind on repayments, the funder can request to cancel those policies, take the refunded premium and apply it to your outstanding balance, which leaves you uninsured. This is the risk that matters most.

Refunds go to the funder first. If a funded policy is cancelled mid-term, the refund is paid to the funder before you. Interest already incurred and some fees generally aren’t refundable.

Repayments come out by direct debit. Dishonour fees and default interest apply if a payment fails.

What it costs

The funder will show you an Annual Percentage Rate (APR) and a total repayment amount. The APR is the useful number for comparison.

Our commission is built into that rate, it is not charged to you separately on top of it. The total cost of credit is made up of the interest, the funder’s application fee, and the commission we receive, and all of it is disclosed in the funder’s contract documents and in the figures we send you at renewal.

How we’re paid

We need to be upfront about this: the funder pays us a commission calculated as a percentage of the amount funded.

That means we earn more if you fund more, and we earn nothing if you pay your premium in full. It’s a conflict of interest, and we’d rather you knew about it than didn’t.

There is a second conflict you should know about. We are a member of the Steadfast broker network. One of the two funders we use, IQumulate Premium Funding, is owned by Steadfast Group. We hold no shares in Steadfast Group.  Arteva (Principal Finance) is not connected to us or to Steadfast.

How we choose between the two funders.

For domestic/retail policies such as home, private motor, and landlord, we opt for Arteva, the reason for this is that they do not offer application fees, which falls in line with the market standard pay by the month options.

For commercial policies, we opt for IQumulate.

Commission rates differ between the funders, so this matters, and you’re entitled to ask us how we arrived at the recommendation on your contract.

How we manage these conflicts

• We tell you the dollar amount we’ll receive on every funding contract, in your renewal report, before you commit.
• We recommend funding only where we think it suits your situation, and we always set out what paying in full would cost you instead.
• We ask you to confirm in writing that you’ve seen these figures and understand how we’re paid before we put a funding contract in place.
• Declining funding, arranging it yourself, or using a different funder makes no difference to the service we provide.
• We review our funding arrangements at least annually to make sure they aren’t creating a conflict we can’t manage.

We arrange funding through Arteva (Principal Finance) and IQumulate Premium Funding. We don’t compare every funder in the market.

If you’re struggling to make a repayment

Talk to us before you miss one, not after.

Because the funder can cancel your policies and use the refund to clear the debt, a missed repayment can leave you without cover at the exact point you can least afford a loss. That outcome is avoidable, and it is much easier to avoid early.

If you’re under financial pressure, tell us. We’ll contact the funder on your behalf about restructuring the repayments or the term, and we’ll look at whether any of the funded policies can be adjusted rather than cancelled. We can’t promise the funder will agree, but we’ll put the case and we’ll tell you plainly where you stand.

If you’re experiencing financial hardship, illness, family violence or any other circumstance making this harder to deal with, let us know and we’ll adjust how we work with you.

The alternatives

Funding isn’t automatically the right answer. Worth considering:

Paying in full at inception. No interest, no funding fees. If the cash is there, this is almost always cheapest, and it’s the comparison we’ll always give you.

Your existing finance facilities. A business overdraft or line of credit may be cheaper than funding, and it doesn’t give a third party the power to cancel your insurance. Your bank or finance broker is the person to ask.

We can’t give you credit advice, tax advice or accounting advice. If you’re weighing these up, your accountant or finance broker is the right person to ask.

Who we can arrange funding for

We arrange premium funding for business and commercial policies as well as for personal insurance such as home and contents, private motor or personal landlord policies.

Rolling over at renewal

If you’d rather not fill in a funding application every year, you can give us a standing authority to arrange it at renewal. If you do:

• We send you the full figures, including the dollar amount of our commission
• You can stop it any time before the renewal date, and you can withdraw the authority whenever you like.
• We won’t roll over if the amount has increased materially, the funder has changed, you’ve missed a repayment or told us you’re under pressure, or we haven’t been able to reach you.

In those cases we come back to you and ask.

Questions, or if something goes wrong

Ask us anything on this page, how we’re paid, why we recommended a particular funder, what the figures mean. We’d rather answer it than have you wonder.

We subscribe to the Insurance Brokers Code of Practice, which sets standards for how we disclose what we earn and how we manage conflicts of interest. Premium funding is covered by the Code.

If you’re not happy with something we’ve done, tell us and we’ll deal with it through our complaints process. If we can’t resolve it, you can take it to the Australian Financial Complaints Authority (AFCA) at afca.org.au or 1800 931 678, and you can report a suspected Code breach to the Insurance Brokers Code Compliance Committee at insurancebrokerscode.com.au.