Home / International / More UK SMEs pay insurance premiums on credit cards
7 June 2021
Small businesses in the UK are borrowing more to pay for business insurance, premium funding company Premium Credit says.
Premium says its net finance advances for commercial insurance rose 11% in 2020 on roughly the same number of policies.
A study by Premium found almost a quarter of those who use credit to pay for insurance premiums upped the amount they borrowed in the past year, with average additional credit coming to nearly £1300 ($2377). It found 60% of this went on credit cards while 40% involved finance from insurers or other lenders. Almost a quarter used personal or business loans.
The increased borrowing was blamed on higher insurance premiums by 36% of firms.
“It is worrying that so many are relying on credit cards which can be an expensive way to pay for insurance if you only make the minimum monthly payment,” Premium Chief Sales & Marketing Officer Owen Thomas said.
Premium Credit’s Insurance Index shows cash reserves fell during the COVID-19 crisis at a third of firms, and 7% had no cash reserves.
Of SMEs who used credit to pay for insurance, three quarters bought vehicle cover, just over half bought property cover, almost a third bought employer liability insurance, a quarter bought business interruption insurance and just over a fifth bought cyber cover.
British Insurance Brokers’ Association CEO Steve White says the research underlines the importance of credit in ensuring companies can continue to afford business-critical cover.
“Insurance brokers can advise on suitable insurance and discuss premium finance should they want to spread the cost of their policies,” Mr White said.