New analysis from Premium Credit score, a UK supplier of insurance coverage for companies, reveals that 51% of small and medium enterprises (SMEs) depend upon credit score to pay for his or her insurance coverage, borrowing a mean of round £1,130. The examine discovered that roughly 13% of SMEs utilizing credit score for insurance coverage claimed to have borrowed over £3,000 to fund their protection.
Premium Credit score’s Insurance coverage Index, which tracks insurance coverage buying and financing traits, found that amongst firms utilizing credit score for insurance coverage funds, 25% reported taking over extra credit score over the previous yr, whereas 22% borrowed much less, and 35% maintained the identical borrowing stage. This marks a shift from final yr’s findings, the place 21% reported taking over extra credit score, 24% borrowed much less, and 37% maintained the identical borrowing stage.
This yr’s index additionally revealed adjustments within the sources of credit score used for insurance coverage funds. Forty-seven per cent of SMEs relied on bank cards, whereas 40% used finance from insurance coverage and premium finance firms. This represents a rise from final yr’s index, which discovered that 41% used bank cards and 34% used finance from insurance coverage and premium finance firms.
Nonetheless, the index additionally recognized a regarding development of diminished insurance coverage protection amongst SMEs, with 25% reporting a lower in protection ranges throughout varied insurance coverage varieties, together with car, property, and public and product legal responsibility. Moreover, round a 3rd (32%) of SMEs that diminished protection ranges cancelled at the least one coverage, whereas 10% deliberate to extend protection within the coming yr.
Among the many causes cited for elevated borrowing for insurance coverage funds, rising power payments (53%), rising premiums (45%), and elevated materials prices (41%) have been the most typical components. Moreover, the analysis revealed that 45% of SMEs skilled a rise in insurance coverage premiums over the previous yr, with 9% reporting a big improve.
Adam Morghem, Premium Credit score‘s Technique, Advertising and marketing & Communications Director, expressed concern over the development of companies chopping again on protection, noting the related dangers, equivalent to corporations being unable to assert for injury on account of underinsurance.
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