SMEs increasingly rely on credit to cover insurance

Some 59% of SMEs are relying on credit to pay for their insurance, borrowing on average around £1,105. Nearly 9% of those report having borrowed over £3,000 to fund their cover.

This is among the findings of Premium Credit’s latest Insurance Index, published today, which monitors insurance buying and how it is financed, found that of those companies using credit to pay for their insurance. Around 21% of those polled say they have taken on more credit over the past year for this purpose.

Among those businesses using more credit, 43% said it is because of the ongoing impact of the Covid-19 crisis followed by 30% that said it was because their firm had taken on more credit for other reasons and did not have the cash to pay for insurance. Around 29% blamed rising premiums and 28% pointed to a drop in income.

Eight per cent of those using credit to pay for their insurance have seen their premiums rise dramatically in the past year while 47% report slight increases. Only 4% have seen premiums fall.

In terms of the credit being used, 41% are using credit cards, and 34% are using premium finance and/or finance provided by insurers. Some 22% have taken out personal or business loans to fund insurance while 10% have turned to friends and family to finance cover.

Owen Thomas (pictured), chief sales officer at Premium Credit commented: “Credit plays a vital role in ensuring that businesses continue to have the right type and level of insurance that they need across their operations. The 100% offer of a finance option by brokers – especially because of the continuing impact of the Covid-19 pandemic on businesses up and down the country – has never been more critical.”

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