Premium Finance Market Expected to Reach $139.7 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Premium Finance Market, By Type (Life Insurance and Non-life Insurance), By Interest Rate (Fixed Interest Rate and Floating Interest Rate), and By Provider (Banks, NBFCs, and Others): Global Opportunity Analysis and Industry Forecast, 2023-2032". The premium finance market was valued at $47.8 billion in 2022, and is estimated to reach $139.7 billion by 2032, growing at a CAGR of 11.5% from 2023 to 2032.

Premium financing is an insurance funding arrangement in which a policyholder borrows funds from a financial institution (usually a bank) to pay for the premium of a new insurance policy, and in doing so, assigns part or all of the rights under the insurance policy to the financial institution as collateral. Premium financing involves using the cash value of a policy as collateral for a loan. As a result, it is more commonly used in purchasing plans with a cash value, such as participation policies, universal life policies, and various forms of endowment policies.

The increased demand for insurance is a significant factor driving the growth of the premium finance market. The need for accessible and affordable premium payment options becomes important as more individuals and businesses recognize the importance of insurance coverage to mitigate risks. Furthermore, an increase in premium rates of insurance drives the growth of the market. Higher premium rates can place a significant financial burden on policyholders, especially businesses, and individuals with large insurance needs. This creates a demand for premium financing as it allows policyholders to spread the cost of their insurance premiums over time, making it more manageable and ensuring they remain adequately covered. In addition, the integration of technology into financial services has streamlined and simplified the premium financing process. With user-friendly online platforms and mobile apps, individuals and businesses can easily access and apply for premium financing life insurance and other premium financing solutions which increases the adoption of premium finance options.

However, the risk of default in premium payment, and the complex and time-consuming loan application process hamper the growth of the market. On the contrary, the adoption of AI in insurance platforms is expected to provide lucrative growth opportunities to the premium finance market in the upcoming years. AI-powered insurance platforms can quickly analyze vast amounts of data to figure out the amount to be paid for insurance. Furthermore, artificial intelligence (AI) can also make the insurance process more efficient.

On the basis of type, the life insurance segment acquired a major share in 2022, and is projected to be the fastest-growing segment during the forecast period. The growth of the life insurance segment is driven by the fact that more individuals are recognizing the importance of life insurance to safeguard their close ones, creating a greater demand for policies.

Region-wise, North America dominated the market in 2022, owing to a surge in awareness of premium finance options and the increase in cost of insurance premiums. These factors have been significant drivers for the premium finance market growth in North America. However, Asia-Pacific is considered to be the fastest-growing region during the forecast period. This is attributed to the rise in affluence and economic growth in many Asian countries that drive the demand for insurance. Furthermore, the increase in awareness of financial solutions such as premium finance is driving the premium finance market trends in the region.

The COVID-19 pandemic positively impacted the premium finance market size, leading to the increased importance of insurance coverage among insurers during a global health crisis. Furthermore, the premium finance market saw a surge in the adoption of premium finance, with an increased focus on digital solutions and enhanced customer experiences. Moreover, the pandemic accelerated the adoption of digital technology and remote work, influencing consumer behavior. This digital transformation prompted premium finance companies to enhance their online presence and develop user-friendly platforms for clients to access and manage their payment plans.     

Key Findings of the Study

• On the basis of type, the life insurance segment accounted for the highest premium finance market share, in terms of revenue in 2022, and is the fastest-growing segment during the forecast period.
• On the basis of provider, the banks segment attained the highest market share in 2022.
• On the basis of region, North America generated the highest revenue in 2022.  

The key players operating in the premium finance market analysis include IPFS Corporation, JPMorgan Chase & Co., Lincoln National Corporation, AFCO Credit Corporation, Agile Premium Finance, ARI Financial Group, US Premium Finance, Byline Bank, Capital for Life, and Valley National Bank. These players have adopted various strategies to increase their market penetration and strengthen their position in the premium finance industry.