Over a third of SMEs cut cover last year – Premium Credit

One in four (24%) SMEs may have been underinsured for the past 12 months. 

This is according to Premium Credit’s Insurance Index, which monitors changes to insurance buying trends.

It found that 25% of all 463 surveyed SMEs believe the underinsurance problem has worsened in the past 12 months, with 35% admitting they have cut cover over the period. 

It comes as over half of firms (56%) said the total cost of their business insurance has increased since they last renewed policies, compared with 13% who estimate costs have fallen.

However, the research also revealed that 24% of SMEs are planning to increase cover over the next 12 months, spurred by the 23% increase of SMEs switching to paying monthly in the past year.

What insurance will see the most cover?

According to Premium Credit data, employers’ liability cover is most likely to see increases in coverage from 39% of surveyed SMEs. 

Following employers’ liability cover, the research showed that in the next 12 months property insurance would be likely to see an increase in cover by 36% of firms, while 25% of SMEs said they would increase public and product liability cover.

Jon Howells, chief commercial officer at Premium Credit, said: “Underinsurance is an issue for SMEs, with substantial numbers saying that they do not have enough cover after reducing or even cancelling policies.

“Rising insurance costs help to explain why firms are underinsured but it can’t be ignored and it is encouraging to see signs that SMEs are increasing cover. Switching to paying monthly for insurance and using credit helps with budgeting and makes policies more affordable while improving cashflow and allowing investment into other areas of the business.”