Insurance Premium Financing (herein after referred to ‘’IPF’’) is a loan product designed to finance payment of non-life insurance premia due to an insurance company from the Insured. The Bank enters into an agreement with the Insurer and the Insured whereby the Bank agrees to pay immediately in full the insurance premia of the Insured on the terms and conditions stipulated in the IPF Agreement.
IPF requires endorsement by an Insurer as it creates certain rights and financial interest of the Bank in the insurance policy financed and should therefore be noted in the policy appropriately.
The basic conditions contemplated in the IPF Agreement are twofold:-
- The Insured agrees to pay to the Bank the insurance premium in an agreed manner and at an agreed rate of interest over a period of time.
- In the event that the Insured fails to pay the agreed installments to the Bank as scheduled, the Insurer shall immediately upon receiving first demand or notice from the Bank redeem the pro-rated balance of the insurance premium (refundable premium) paid to Insurer.
Parties to an Insurance Premium Financing Loan transaction
- Applicant/Borrower/Insured – is the principal debtor borrowing funds to finance payment of insurance premium due under the policy in the name of the principal debtor as the Insured.
- Insurer – Is the Insurance Company issuing/endorsing the policy or contract of insurance in the name of the Applicant/Borrower/Insured.
- Broker – An intermediary that arranges underwriting of the policy.
- Bank/Financier – This is the provider of funds to the Applicant/Borrower/Insured for the payment of insurance premium.
The product shall be available to a Borrower who is a legal holder of the policy for securing a contract with the Insurer.
Eligible Insurance Policy and Premium
- There is no bias on the types of insurance policy for which insurance premiums shall be financed, shall be financed, except health and life insurance policies.
- The Bank shall only finance premiums for insurance policies that are current and continuing or newly written policies.
- There shall be no IPF Application for a revolving manner so as to be relied for successive premiums (a fresh application shall be made in each case).
Initial Instalment Deposit
The Bank shall finance 100% of the aggregate insurance premia due. However, the client shall be required to make an initial deposit equivalent to one loan installment prior to disbursement of the premium amount.
The maximum repayment period on IPF Loans shall not exceed 10 months.
The Bank shall from time to time publish interest rates applicable on IPF Loans taking into account the prevailing market conditions. Interest rate on IPF Loans will be computed on a flat basis and installments worked out under Rule of 78.
A finance charge shall be levied on IPF based on the gross premium financed by the Bank (premium amount paid by the Bank) at the agreed rate on a flat basis.
The Bank shall finance insurance premiums for policies written by insurance companies selected and approved by the Bank based on various factors.
- An IPF Application and Agreement (contained in the Application form) executed by all the parties i.e.
- Borrower under seal, if the Borrower is a limited company.
- Insurer (signed by authorised signatories).
- Broker (if financed through a broker).
- A guarantee and indemnity: – issued and executed by authorised signatories of the Insurer in the pre-agreed standard form.
- Proof of Addresses – postal and physical – (such as production originals of utilities bills, etc).
- Copy of National I/D and PIN certificate of the Applicant.
- A copy of the premium quotation from the Insurer or Broker giving the name of the Insurer.
- Standing instruction or post dated cheques for the installment amounts.
- Initial deposit amount in cash or other form of cleared funds.
For An Individual:
All the requisite documentation.
For a Corporate / Business:
In addition to the requisite documentation, the Applicant shall submit the following.
- Copy of Certificate of Incorporation and/or Business registration certificate.
- Proof of Addresses – postal and physical- (such as production originals of utilities bills, etc).
- Board resolution to avail the IPF Loan
- Certified copy of the Memorandum and Articles of Association or Partnership Deed.
For more details, contact our Corporate Banking Division on +254 20 322 1001, or visit any of our branches.