Adam Morghem

Use of credit for insurance policies surges amid cost-of-living crisis, study finds

According to recent research from Premium Credit, there has been a significant increase in insurance customers using credit to pay for their policies.

The study indicates that 72% of customers now use credit to fund their insurance, up from 61% the previous year, with the most substantial rises seen in motor and home insurance policies.

The research also highlights that 49% of customers use credit for home insurance, up from 40%, and 48% for motor insurance, up from 40% last year. Credit use has increased across all insurance categories, including life, pet, health, travel, critical illness, and specialist insurance.

Premium Credit’s Insurance Index, which assesses insurance buying and financing biannually, found that 38% of customers who use credit have borrowed more than in the previous year. While 42% reported no change in their borrowing levels, 3% reduced their borrowing, and the remaining 17% were unsure or did not disclose any changes.

The study suggests the cost of living crisis as the main driver for increased borrowing, with 32% attributing it to their financial squeeze, 18% to rising energy bills, and another 18% to increased insurance premiums.

Adam Morghem, strategy, marketing & communications director at Premium Credit, commented on the findings: “There has been a sharp rise in the number of people turning to credit to pay for one or more insurance policies as the cost of living pressures continue to tighten budgets.

“The increases have been particularly notable in car and home insurance but the rises are across the board underlining not only the importance of credit in the insurance market but also the need to find the most efficient payment options available.”