This new service is an economic catalyst, particularly for Vanuatu’s small businesses, and will build business resilience in the face of Vanuatu’s exposure to natural disasters and other risks.
The new insurance payment service changes the local insurance landscape by providing consumers with more options for compliance with the Vanuatu Insurance Act (VIA). By law, the Vanuatu Insurance Act (VIA) states “premiums must be paid in full by the client to the Insurer or Intermediary within 30 days of Inception or Renewal unless a premium instalment arrangement has been made”.
To date, insurance premium payment services have not been offered by insurance companies or banks in Vanuatu. This means there has been a huge gap and exposure for both Vanuatu’s banks and insurance consumers.
That is why the launch of Vanuatu Risk and Premium Funding is exciting news for Vanuatu consumers. Vanuatu Risk and Premium Funding will allow the maintenance of insurance coverage and legal compliance through an achievable pay-as-you-go, fixed interest funding scheme.
The launch of Vanuatu Risk and Premium Funding has been endorsed by the Reserve Bank of Vanuatu, who recognise the positive impact the company’s service will have on Vanuatu’s economy.
“The Vanuatu Risk and Premium Funding product offering is fully supported to assist the economy of Vanuatu,” said Simeon Athy, the Reserve Bank Governor.
Achieving compliance with the Vanuatu Insurance Act has been difficult for consumers. Making an upfront insurance payment in full within the 30-day insurance inception period can be hard for a household dealing with family or education commitments, and it’s difficult for businesses too who are constantly trying to manage cash flow.
“Everyone needs insurance in some shape or form, and it can be expensive. But a lot of people can’t afford to pay a big premium in one go. That’s why we set up Vanuatu Risk and Premium Funding - to help consumers pay their premiums on time and safeguard their property and businesses while complying with the law,” said Bob Sanders, Director of Vanuatu Risk and Premium Funding.
“Premium funding is a short-term, fixed interest loan facility that allows clients to pay their annual insurance premiums by monthly installments over a period of nine months. The Vanuatu Risk and
Premium Funding product is tailored to deliver a simple, flexible, and secure cash flow management tool available for all business industries at a very competitive rate.”
Research shows that approximately 80% of insurance consumers in Vanuatu’s domestic and small business sectors cannot afford to pay insurance premiums in full within the legal 30-day period.
“The average House and Home Contents Insurance Policy premium alone is in the vicinity of vt500,000 per year. Add Cyclone Insurance and you’re looking at VT700,000. That’s a lot to pay in one go but if you don’t pay your premium on time - even by one day - you are exposed and insurers can decline your insurance claim,” said Mr. Sanders.
“We are working with all insurance companies and banks based in Vanuatu to streamline and speed up the application and acceptance process for insurance consumers.”
Vanuatu has been declared the country in the world that is most at risk of natural disasters, and Cyclone Pam was a stark reminder of the challenges of living in a tropical paradise. Add the risk of earthquakes, volcanic eruption and tsunamis to the risk of cyclones and it is enough to give even the hardened business person a few extra grey hairs.
“Risk is something all businesses and households in Vanuatu have to contend with. Risks can be managed by a range of means. Good quality construction is a good starting point and developing disaster resilience plans for business is another recommended step. The greatest peace of mind is having a decent insurance policy in place, as it is the backstop to even the most unexpected of disasters,” said Mr. Sanders.
Photo supplied Caption: Vanuatu Risk and Premium Funding will help consumers pay their premiums on time and safeguard their property and businesses while complying with the law.