More insurance customers using credit to buy their cover are increasing the amount they borrow to help ease cost of living pressures. That’s the word from premium finance company, Premium Credit, who are seeing the results of inflation affect the market. Maybe it’s time to offer subscription model cover packages on Home, Motor, Healthcare and more, so that consumers can pick n mix which aspects of insurance really matter to them?
Here’s the word;
- Premium Credit’s Insurance Index, now in its fourth year, found that nearly two out of five (38%) customers who use some form of credit to pay for one or more insurance policies borrowed more than they had in the previous 12 months for this purpose.
- Around half (49%) say they have not borrowed more while 3% say they have borrowed less and 10% didn’t know.
- That is an increase on the one in three (34%) borrowing more as reported by the index in March 2022 and the one in four recorded by the index in October 2021. The number of people using some form of credit to pay for one or more insurance policy was also higher at 70% compared with 66% in March 2022 and 69% in October 2021.
- The biggest driver for increasing borrowing identified by Premium Credit’s research among those who use credit to buy insurance was the ongoing cost of living squeeze. Around 44% said they borrowed more to ease financial pressures. Just one in six (16%) said they borrowed more because of rising premiums while 6% said their income had fallen and 3% said they had lost their job.
- Around 6% who used credit to pay for one or more insurance policy said they had defaulted on repayments during the past year which is slightly up on the 5% who said they had defaulted in 2022.
- The number of customers cancelling policies as a result of not being able to afford cover has remained largely unchanged. Around 3% said they have cancelled contents cover – the same result as in 2022 – while around 4% have cancelled buildings cover which was slightly up on 3% in the previous index.
- Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, found the use of different forms of borrowing remained unchanged. Credit cards remain the most popular form of borrowing used by 35% which was unchanged on the previous year while 27% rely on finance offered by their insurer and/or premium finance provider which was also the same in last year’s index.
- The numbers using personal loans and borrowing from family and friends dropped slightly from 9% and 7% in the 2022 index to 8% and 6% this year. Around 4% relied on high interest loans.