This research from Premium Credit shows how stretched some UK household budgets are, with consumers using credit to pay essential bills like insurance. Here’s the word;
Nearly three out of four personal lines insurance customers use some form of credit to pay for one or more policies with half using credit to pay for car insurance, new research from the UK’s leading premium finance company, Premium Credit, shows.
Its study found 71% of customers use some form of credit to fund cover which is virtually unchanged from the 72% recorded in last year’s Premium Credit Insurance Index but substantially higher than the 61% who were using credit two years ago.
CAR INSURANCE
Given the rapid rise in premiums over tha past year, it’s no surprise to see customers using credit to pay big bills like £2000-£3000 per year. Use of credit is highest among car insurance customers – 50% use some form of credit to pay for car insurance compared with 48% a year ago. The research found three out of four (75%) car insurance customers had seen a rise in their annual bill in the past year with around one in eight (13%) saying premiums had increased by 20% or more. Around 10% say they are driving less to cut their insurance bill.
Premium Credit’s Insurance Index, which monitors changes to insurance buying trends, found use of credit rose for almost all types of insurance it monitors apart from home insurance and critical illness where use of credit dropped slightly.
The index found almost half (48%) of insurance customers value the ability to pay monthly through premium finance or finance offered by insurers. Around 19% say they use it for all major insurance bills while 14% use it for some insurance bills and 14% have used it in the past.
The key reason they value paying monthly is that it helps with budgeting. Around 71% said that, while 27% say it makes sense as they pay other bills such as mortgages and mobile phones monthly.
Around two out of five (41%) customers who use some form of credit to pay for one or more insurance policy borrowed more than they had in the previous 12 months, the research found, compared with 38% who said this in last year’s index. However, 43% said they have not borrowed more compared with 42% last year while 2% said they had cut borrowing compared with 3% last year.
Of those who have borrowed more, the ongoing cost of living squeeze was highlighted as the biggest reason for this – cited by 36%, while 24% blamed insurance premium increases and 14% said it was because of rising energy bills.
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