More than half of UK small and medium-sized enterprises (SMEs) now use credit to pay for their insurance, according to new data from Premium Credit.
The company’s latest Insurance Index shows that 54% of SMEs financed premiums with credit in the past year, compared with 51% two years ago. Average borrowing rose to £1,180, while 15 per cent of firms reported borrowing more than £3,000.
Construction businesses accounted for the largest share of Premium Credit’s lending for insurance, representing 13.8% of total loans issued last year. Although down slightly in 2023’s 14.3%, the sector’s share is still higher than the 12.8% recorded in 2022.
The professional and scientific sector recorded the sharpest growth, rising to 13.3% of total lending, up from 12.5% in 2023 and 12.1% in 2022. Manufacturing ranked third at 9.9%, followed by wholesale and retail trade (8%) and land transport (7.9%).
Premium Credit’s survey found that 51% of SMEs experienced higher insurance costs over the past 12 months, with one in ten describing the increase as “dramatic”. The figures are broadly consistent with last year’s findings, when 50% reported higher costs and 12% said premiums had risen sharply.
Jon Howells (pictured above), chief commercial officer at Premium Credit, said credit remains a critical tool for many businesses facing growing insurance bills.
Premium finance enables firms to spread the cost of annual insurance policies over instalments rather than paying in a lump sum. While it can ease cash-flow pressures, industry advisers note that businesses should be mindful of interest charges and ensure repayments are affordable.
Premium Credit, one of the UK’s largest premium finance provider, produces the Insurance Index to track borrowing trends and gauge how SMEs manage the cost of risk transfer.
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