Australia’s use of premium funding lags behind overseas markets, but demand is likely to grow as brokers increasingly promote the service to clients, according to an industry executive.

Insurance Premium Financiers of Australia (IPFA) Chairman Bob Dodd says about one-third of the country’s $15 billion of commercial general insurance premiums are paid using funders, compared with about 60% in the US and more than 40% in the UK.

Premium funding, which can spread insurance costs over multiple monthly payments, has particularly gained in popularity among SMEs, Mr Dodd says.

“The usage is certainly improving and I would anticipate that we will continue to see that as an industry,” he told insuranceNEWS.com.au. “I would like to see it at 40-45% in the near future, but that’s an average. Small businesses are doing more than that already.”

Mr Dodd says increased demand tends to be driven by awareness and improved technology, rather than economic cycles.

“What I have seen over time is more demand because of the way the product is promoted, distributed and linked with broker systems. It is more integrated than it ever has been before.”

The IPFA’s members account for about $5.1 billion in premium volume.