Insurance premium finance remains an attractive asset class for banks and independent operators. The asset class has a track record of consistently delivering strong risk-adjusted returns with low credit losses. The short average term also allows lenders to quickly adjust to a rising rate environment. In a challenging macroeconomic environment, borrowers are likely to leverage premium financing to better manage cash flow and liquidity, accelerating growth for premium finance lenders.
On an aggregate basis, this group reported a 0.6% quarterly increase in outstandings and an impressive 20.9% year-over-year uptick.