New research from Premium Credit, a UK provider of insurance for businesses, reveals that 51% of small and medium enterprises (SMEs) depend on credit to pay for their insurance, borrowing an average of around £1,130. The study found that approximately 13% of SMEs using credit for insurance claimed to have borrowed over £3,000 to fund their coverage.
Premium Credit’s Insurance Index, which tracks insurance purchasing and financing trends, discovered that among companies using credit for insurance payments, 25% reported taking on more credit over the past year, while 22% borrowed less, and 35% maintained the same borrowing level. This marks a shift from last year’s findings, where 21% reported taking on more credit, 24% borrowed less, and 37% maintained the same borrowing level.
Go deeper with GlobalData
This year’s index also revealed changes in the sources of credit used for insurance payments. Forty-seven per cent of SMEs relied on credit cards, while 40% used finance from insurance and premium finance companies. This represents an increase from last year’s index, which found that 41% used credit cards and 34% used finance from insurance and premium finance companies.
However, the index also identified a concerning trend of reduced insurance coverage among SMEs, with 25% reporting a decrease in coverage levels across various insurance types, including vehicle, property, and public and product liability. Additionally, around a third (32%) of SMEs that reduced coverage levels cancelled at least one policy, while 10% planned to increase coverage in the coming year.
Among the reasons cited for increased borrowing for insurance payments, rising energy bills (53%), rising premiums (45%), and increased material costs (41%) were the most common factors. Furthermore, the research revealed that 45% of SMEs experienced an increase in insurance premiums over the past year, with 9% reporting a significant increase.
Adam Morghem, Premium Credit‘s Strategy, Marketing & Communications Director, expressed concern over the trend of businesses cutting back on coverage, noting the associated risks, such as firms being unable to claim for damage due to underinsurance.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
