Small and medium enterprises (SMEs) are switching to monthly payments for insurance bills as premium increases continue put pressure on their businesses, research from Premium Credit has revealed.
Premium Credit’s latest Insurance Index, showed that 43% value the ability to pay for insurance monthly through premium finance, or finance offered by insurers, compared with 32% who preferred to pay in a lump sum.
Around 15% paid all insurance bills monthly while 18% use monthly payments for many major insurance bills and 10% said they have used monthly payments for major bills in the past.
Around 25% remain undecided between monthly payments and lump sums.
The index found SMEs are under increasing pressure from rising insurance bills – more than half (51%) reported that total insurance costs have increased in the past 12 months with 12% reporting dramatic increases in their insurance bills.
Just 2% reported a drop in the cost of their insurance bills.
Nearly one in six SMEs (16%) said they have made cuts in their business to reduce costs so they can continue to pay for insurance in response to increases while 14% have cut cover and 13% have increased the excess on their insurance policies.
Around 11% have cut back on investment.
That could continue in the year ahead – around 17% said they will make cuts to their business to help meet rising bills while 14% stated that they will reduce the level of cover they have.
In addition, 10% said they will cancel policies, while 8% reported that they could be forced to cut jobs.
Adam Morghem, Premium Credit’s strategy, marketing and communications director, said: “SMEs are generally facing rising insurance costs and our study shows many have seen dramatic increases in their insurance bills.
“Paying for insurance monthly makes sense against this background but the research shows firms see a wide range of benefits from paying monthly which apply even when bills are not increasing.
“Many SMEs say they already pay for a range of items monthly so it makes sense to do the same with insurance.”
He added: “Premium finance is creating opportunities for businesses through convenient payments as they buy their insurance, helping firms spread payments to better manage their finances and cashflow.”
