SMEs cancelling at least one policy as more than half rely on credit to fund cover

More than half of SMEs are relying on some form of credit to fund their insurance – but several have felt the need to cancel at least one policy to save money, according to a new analysis published today (8 August 2023).

Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, revealed that 51% of SMEs were borrowing an average £1,130 to pay for their cover.

However, it found that 25% of SMEs had reduced the level of cover they have across a range of insurance – vehicle, property and public and product liability were the most likely to see reductions in cover.

The index also revealed that a third (32%) of SMEs that had reduced their level of cover cancelled at least one policy.

Up to 10%, however, shared they plan to increase their level of cover in the year ahead.

Viewsbank conducted research among 933 SME owners and managers between 17-20 March 2023 for the data in Premium Credit’s Insurance Index.

Credit

Meanwhile, a separate analysis conducted by Premium Credit found firms in the professional and scientific sector were increasingly leaning on credit when looking to obtain insurance.

Figures showed the industry accounted for 12% of net advances in 2022 – up from 10% in 2021 and 9% in 2020.

The construction sector, meanwhile, were the most likely to use credit, also accounting for 12% of all net advances.

Net advances in the construction sector remain unchanged compared to 2021 and 2020.

“Insurance is vital for business operations as demonstrated by the near 20% growth in net advances we have seen year-on-year,” said Premium Credit chief sales officer Owen Thomas.

“It is particularly important in the construction sector, which accounts for how much lending we do in the sector.”