The Management of UT Bank on Wednesday launched on to the market the first premium finance scheme, which aims at assisting individuals and companies pay their annual insurance premiums.
Under the scheme, the Premium Finance Consortium will make direct lump sum payments on behalf of clients to insurers to pay the premiums and then spread payment of the amount and interest over a period of 10 months.
The client will pay an initial deposit of 25 per cent of the premium.
The scheme is a collaborative effort between UT Bank and All Risks Insurance Consultancy.
In a presentation to insurance companies, brokers and practitioners to introduce the scheme, Mr Mark Obeng-Appau, Head of Project of the Consortium, said the scheme would lead to a substantial reduction in insurance costs and overall costs of doing business.
In addition, the lump sum financing of the premiums will make financial resources available and reduce cash flow worries for both the insurer and the insured and make payment flexible as credit is repaid easily on monthly basis.
Mr Obeng-Appau said UT Bank was seeking to take advantage of the regulatory environment following the National Insurance Commission’s directives to abolish premium credit within the insurance industry.
It is also a response to efforts to place the insurance industry in a position to take on oil, energy and other investments projects that entailed huge outlays as well as address the increasing cost of insurance premiums.
Mr Obeng-Appau said the lump sum premium would be available to insurers within 30 days of cover while default in repayment would lead to the cancellation of the policy.
The finance scheme does not cover life, bonds, marine and contract all risk.
Mr Prince Kofi Amoabeng, Chief Executive Officer of UT Bank assured insurance companies and brokers that the corporate entity had no plans to get into general insurance business.
He allayed the fear that details of clients could be used by UT.
Mr Amoabeng asked the insurance companies to be in continuous dialogue with the Consortium to make the Premium scheme viable.