Possible legal problems surrounding HIH premiums are spilling over into the premium funding sector, although the “commercial loan” nature of the contract removes much of the uncertainty about whether to pay.

Insurance Premium Finance Association President Trevor Priddle, CEO of Hunter PF, said most members are customising solutions for clients with no cover but an outstanding premium debt. “Most premium funders are being as flexible as they can,” he said. “It would be foolhardy not to work through the issues with our clients.”

Bob Dodd, CEO of GE Funding Solutions, said the current situation has created some confusion with clients. However, outstanding balances must still be paid. GE is offering to refinance the existing debt as well as the new amount required for new premiums, and won’t charge a credit administration fee.

“We all recognise that some clients are having greater difficulties than others,” Mr Priddle said. “We’ll do what we can to make it easier.”