Risk & Business Magazine Gifford Associates Fall 2015 | Page 30

Premium Financing

The Benefits of a Customized Payment Option
BY: STUART BRUCE, CEO, FIRST INSURANCE FUNDING OF CANADA

What is your commercial insurance
policy really costing you?

The benefits of premium financing can be
advantageous for your business:

A

• Smooth out cash flow with easy
monthly installments
Avoid lump-sum payments with lower
regular payments.

s a business owner, you know the
flow of cash coming into your
business doesn’t always match what’s
going out. Especially when larger bills
like commercial insurance premiums are
due. Even if you have the funds available,
paying your insurance premiums in full
may be costing you more than you think.
Premium financing allows you to defer
the payment of insurance premiums over
the term of the policy rather than paying
it all up front. Premium financing is like
a short-term loan. The finance company
pays your insurance premiums on your
behalf and you pay back that loan over
time, typically between nine and twelve
months.

• Reinvest working capital
Consider opportunity costs. Monthly
payments allow you to put your
capital to work in your business or
invest it in opportunities with a better
return.
• Preserve your available credit
Unlike a typical loan, premium
financing often does not affect
overdraft and credit lines or
borrowing capacity.
• Premium financing costs can be lower
than borrowing alternatives
Premium finance costs are fixed and
can cost you less than alternatives

you may be considering, such as
credit lines or credit cards. If you
are liquidating other investments
or deferring what you would
have contributed toward those
investments, you need to keep in mind
the amount of income you could have
earned against the cost of the loan’s
interest.
• Consolidate multiple policy payments
Multiple commercial insurance
policies can be combined into one
easy monthly payment, allowing for
a single payment plan to cover all
insurance coverage.
• Protect yourself from interest
rate volatility
The interest rate on a premium
financing contact is fixed, so your
payments are consistent and protected
from rate increases. The interest is
also calculated on a declining balance
and may be paid off at any time and
only calculated up to the month of full
repayment.
Premium financing is a customized
payment option for your specific
situation. Speak to your insurance
broker about premium financing for your
business and keep your capital where
it can do the most good – back in your
business.
Stuart Bruce is the Chief Executive Officer
of FIRST Insurance Funding of Canada
(FIRST Canada). Stuart has spent the last
13 years in the premium finance market
place in Canada. He founded Insurance
Pay (iPay) Canada in 2001 and successfully
built the finance management system,
team and broker network from start up to
second largest premium finance company
in Canada. Stuart was appointed CEO of
FIRST Canada after the me