SMES relying on credit to pay for insurance
More than half of the UK’S small and medium-sized enterprises (SMES) are relying on credit to pay for their insurance, borrowing on average just over £1,100, a new study suggests.
Nearly one in ten (9 per cent) of SMES who use credit to pay for their insurance claim to have borrowed over £3,000 to fund their cover, according to Premium Credit’s Insurance Index.
The report, which monitors insurance buying and how it is financed, found that of those companies using credit to pay for their insurance, 21 per cent say they have taken on more credit over the past year for this purpose.
Among those firms using more credit, 43 per cent said it is because of the ongoing impact and fallout from the pandemic followed by 30 per cent who said it was because their business had taken on more credit for other reasons and did not have the cash to pay for insurance.
Some 29 per cent blamed rising premiums and 28 per cent pointed to a drop in income.
The study reveals around one in 12 who use credit to pay for their insurance has seen their premiums rise dramatically in the past year while almost half report slight increases. Just 4 per cent of firms have seen premiums fall.
In terms of the steps taken by these businesses to combat this, 20 per cent have made cuts to their business to reduce costs, 14 per cent say they have increased their claims excess, and 15 per cent have reduced their level of investment in operations.
Around 14 per cent have reduced their level of insurance cover and 11 per cent have cut salaries.