Allen Seldon, director of product and proposition at Close Brothers Premium Finance, explores how, with the right tools and training, premium finance can help boost broker revenue by enhancing affordability for customers.
Premium finance has two core benefits; it enables brokers to offer their clients and customers a way of spreading the cost of their insurance to make it more affordable with a better fit to their monthly budget, more important than ever during the cost of living crisis. Secondly, premium finance provides brokers with a commission income, which can be a valuable addition to a brokerage’s bottom line.
Close Brothers Premium Finance (CBPF) asked brokers for their views on premium finance in our annual broker barometer, conducted with Insurance Age.
There was broad agreement among personal and commercial lines brokers that premium finance enables clients to better manage cashflow (78% agreed) and makes insurance easier to afford (69%). 40% said they experienced increased demand for premium finance in the previous 12 months, and 53% expected that demand to increase as households and businesses feel the pinch of inflation.
Feedback from brokers demonstrated that there is still awareness of the revenue opportunity to be gained from premium finance, but 21% of brokers who do not offer finance to their clients and customers felt that they did not have the training needed to sell the product successfully.
A further 5% of brokers were worried that clients may use it as an opportunity to rebroke. 21% were simply unaware that premium finance is an option.
To allay these concerns and boost the revenue opportunities from premium finance, training brokers to sell premium finance is vital to help maximise their revenue and enhance their client relationships.
Training brokers can make a real difference. CPD-accredited training modules, delivered both face to face and virtually, with a focus on relationship management, financial awareness, building resilience, and sales best practice, have been proven to drive better outcomes for brokers.
The modules also include sessions on the skills and behaviours needed to be successful in sales techniques. These skills are not only designed to enable improved finance sales but they are also valuable for account executives beyond selling premium finance.
Close Brothers undertook data analysis across its broking partners between August 2019 and July 2020, including during the pandemic. A year on, the impact of the training programme was measured, with some striking results.
73% of brokers who underwent training saw increases in the number of new cases (clients taking out premium finance), following training and on average, brokers experienced 35% growth in new cases post training.
This would mean that a broker who had 100 new cases in year one before training would be reasonably expected to have 135 cases in year two after training.
CBPF’s Broker Barometer also found that 11% of brokers don’t offer premium finance to their clients, while take up is 10% or less among one fifth of brokers, and less than 25% among a quarter of brokers.
Only 3% of brokers find 75% or more of their clients and customers opting for finance, so there is significant headroom for increased finance penetration in the intermediated market.
Premium finance sales training underscores the value to be gained by brokers enhancing their understanding of, and ability to offer, premium finance, especially in the current hardened market.
Not only does premium finance drive additional broker revenue, but the survey findings demonstrate recognition among brokers that there is additional benefit as a protection for customers navigating their way through the cost of living crisis. By not offering premium finance, brokers risk missing out on a win win, for them and their customers alike.