New research from Premium Credit, a leading insurance premium finance company in the UK, reveals an increase in small and medium enterprises (SMEs) relying on credit to fund their insurance. According to the latest findings from the Premium Credit Insurance Index, 55% of SMEs now use credit to manage their insurance payments, up from 51% last year, borrowing an average of £1,080.
The data also highlights a significant trend of underinsurance among SMEs, with 27% of firms reducing their coverage levels this year, particularly in vehicle, property, and liability insurance. This reflects a cautious approach in a time when 50% of SMEs report an increase in the cost of their business insurance over the past year.
Adam Morghem, strategy, marketing and communications director at Premium Credit, stressed the importance of credit in maintaining adequate insurance coverage. “Credit is essential to ensuring that SMEs have the correct types and levels of insurance they need across their operations,” Morghem noted. He also pointed out the growing issue of underinsurance, with firms increasingly cutting back on cover and sometimes cancelling policies entirely, leading to a risk of being unable to claim for damages.
The index further shows that various credit options are utilised by SMEs to finance their insurance, with 45% using credit cards and 34% opting for financing from insurance and premium finance companies. About 22% have taken out personal or business loans for their insurance needs.
