The latest from Premium Credit, who are seeing some financial distress across the small biz sector.
New research from the UK’s leading insurance premium finance company, Premium Credit, reveals that 51% of SMEs are relying on credit to pay for their insurance, borrowing on average around £1,130 (please see the attached press release). Around 13% of SMEs who use credit to pay for their insurance claim to have borrowed over £3,000 to fund their cover.
Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, found that of those companies using credit to pay for their insurance 25% say they have taken on more credit over the past year while 22% have borrowed less and 35% are borrowing the same amount.
That compares to 21% who said they have taken on more credit as reported by Premium Credit’s Insurance Index last year which also saw 24% borrowing less and 37% borrowing the same amount.
This year’s index shows 47% who are using credit borrowed on cards while 40% used finance from insurance and premium finance companies. That is up on last year’s index which found 41% relied on credit cards and 34% used finance from insurance and premium finance companies.
However, this year’s index found a quarter (25%) of SMEs have reduced the level of cover they have across a range of insurance with vehicle, property and public and product liability most likely to see reductions in cover. Around a third (32%) of SMEs which have reduced the level of cover cancelled at least one policy. Up to 10% questioned said they plan to increase the level of cover in the year ahead.
Around 45% of SMEs questioned said the value of their insurance premiums had increased in the past year with nearly one in ten (9%) saying it had increased dramatically.
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