Consumers increasingly relying on premium finance – Premium Credit

Consumers were increasingly relying on finance provided by insurers and premium finance firms to pay for general insurance policies in 2025, according to new research from Premium Credit.

The latest edition of the premium finance provider’s insurance index found that 57% of consumers used some form of credit to pay for one or more insurance policies.

Of those, 44% relied on financing from insurers or premium finance companies, compared with 27% who used credit cards.

This marked a sharp shift from Premium Credit’s previous index, published in September 2024, when 30% of consumers using credit relied on insurers or premium finance providers and 40% used credit cards.

The research also showed that 15% of consumers who used credit to pay for insurance had been rejected for a credit card or offered a higher rate than they applied for in the previous 12 months, suggesting tighter access to mainstream consumer credit.

Use of credit was most prevalent among personal lines customers. Three in 10 home insurance customers and 29% of motor insurance customers used some form of credit to pay their premiums, while 18% of pet insurance policyholders also relied on credit.

Premium pressures remained a key driver. Almost half of motor insurance customers said the annual cost of their policy increased at their last renewal, while 50% of home insurance customers reported a rise in premiums.

An alternative option

Despite this, the proportion of consumers borrowing more to pay for insurance fell year-on-year. One in six of those using credit said they had borrowed more than in the previous 12 months, down from 41% in the prior index. Among those who increased borrowing, 39% cited rising insurance costs as the main reason, while 33% pointed to cost of living pressures.

The research also highlighted the consequences of being underinsured. Around one in 10 consumers said they had been unable to make a claim in the past five years because they had no cover or inadequate cover, with 26% of those missing out on claims worth £3,000 or more.

Owen Thomas, chief sales officer at Premium Credit, said customers were actively moving away from traditional consumer credit products.

He said: “The majority of insurance customers use some form of credit to pay for one or more of their insurance policies and increasingly they are looking for alternatives to credit cards and bank overdrafts to help them budget.

“Premium finance is specifically designed to ease the financial pressure of paying out a large lump sum for insurance, enabling customers to spread the cost of an annual policy into more convenient monthly payments.”

The research was conducted by Viewsbank among 969 UK adults between 31 October and 3 November 2025.