Will P&C insurance premium finance suffer less compared to your other markets in a recession?

P&C insurance premium finance is likely to fare better than many other markets during a recession due to its relatively stable nature. Here's why:

1. Essential Demand: Insurance coverage—especially for auto and commercial sectors—is often mandatory. This creates a consistent baseline demand even in tough economic times.
2. Cash Flow Solutions: Recessions can increase the appeal of premium financing as businesses and individuals look to spread out payments instead of paying premiums upfront.
3. Risk Mitigation: Unlike other lending options, the collateral in premium finance is held by the insurance carrier and will be returned by law upon default. No repossessions or foreclosures in Premium Finance.
4. Regulation: Many states require businesses to maintain insurance coverage regardless of economic conditions. This provides a level of market stability for premium finance.

P&C insurance premium finance should fair much better than markets like:

• Consumer credit (auto loans, credit cards, BNPL):
These are tied to discretionary spending, which drops fast in a downturn. Defaults also rise sharply.
• Mortgage origination or real estate lending:
Real estate markets often cool drastically in a recession, hurting new lending volumes and increasing delinquency risk.
• Capital markets (investment banking, M&A, IPOs):
These tend to slow dramatically, as businesses and investors become risk-averse.