National Bank of Malawi (NBM) plc has rolled out an insurance premium financing facility where the bank will pay annual insurance premiums on behalf of its customers thereby freeing up their cash flow in the process.
Announcing the introduction of the facility in Blantyre, NBM plc Head of Retail Banking Division Oswin Kasunda said the Insurance Premium Finance (IPF) product allows the bank to pay insurance premiums to the insurance company on behalf of the customer and grants a loan to the customer which is repaid in monthly instalments.
"The facility enables our customers both retail and corporate clients to pay their insurance premiums in instalments rather than in one lump sum amount. This facility has a low interest rate and allows the customer to spread the cost of insurance over the term of the loan," said Kasunda.
"Insurance Premium Finance also smoothens business cash flow by allowing payment of premiums in monthly affordable instalments.The security for the loan is the policy itself and its proceeds, no other security is required," added Kasunda.
He explained that the first instalment is due at the inception of the policy and the product has a maximum tenor of 10 months and minimum of 8 months.
"This product covers premiums for commercial, auto, plant and machinery and other major insurance covers," said Kasunda.
He said the facility offers a quality service and foster goodwill between the bank and insurance customers who have had challenges to pay insurance premiums upfront.
"We also feel that by offering this product in partnership with insurance brokers and insurance companies we will have established a long term mutual benefit relationship to all parties," said Kasunda.
A prospective customer Phumisa Kaitane who is Head of Finance and Corporate Services at Nation Publications Limited (NPL) hailed NBM plc for coming up with the facility saying it has come at a right time when most companies and individuals are facing cash flow challenges due to the Covid-19 pandemic.
"As a customer, I manage multiple insurance policies for both corporate and employees and this involves a huge upfront cash outlay and this product will definitely eliminate this requirement and ease my cash flows for management of other operations."
"Employees always seek relief from the company to have their insurance premiums defrayed over a period and with this product, I will have the leverage to bundle all the insurance needs of these employees into a single premium finance contract, allowing for a single payment plan that the company will administer on their behalf with the bank," said Kaitane.