Consumers are increasingly turning to finance from insurers and premium finance companies to ensure insurance is affordable, new research1 from the UK’s leading premium finance company, Premium Credit, shows.
The latest Insurance Index, which monitors changes to insurance buying trends, found nearly six out of 10 (57%) consumers use some form of credit to pay for one or more policies they have. Forty four percent of those are using finance from insurers or premium finance providers, compared with 27% using credit cards.
That has increased from 30% using finance from insurers and premium finance in Premium Credit’s last Insurance Index2 while the number using credit cards has dropped from 40% over the same period. The research found 15% of those who use credit in some form to pay for insurance have been rejected for credit cards or offered a higher rate than they applied for in the past 12 months.
Use of credit is highest among home and car insurance customers – 30% of customers with home and 29% with car insurance use some form of credit to pay premiums. Around one in five (18%) pet insurance policyholders pay with some form of credit and 17% of life insurance customers also do so.
The study found one in six (16%) who use credit to pay for insurance policies borrowed more than they had in the previous 12 months. That is significantly lower than the 41% who said they had borrowed more in last year’s index. The key reason for increased borrowing this year cited by 39% was a general rise in insurance costs, although a third (33%) blamed cost of living pressures.
At the time of asking, around half (48%) of car insurance customers said the annual cost of their policy increased at their last renewal, while 50% of home insurance customers said their annual costs increased, the research found.
Premium Credit’s research highlighted the cost of not having the right insurance – around 10% of people have not been able to make claims in the past five years either because they had no cover or had inadequate cover. Around a quarter (26%) of them missed out on claims worth £3,000 or more.
Owen Thomas, Chief Sales Officer, Premium Credit said: “Customers are increasingly turning to finance from their insurer or premium finance provider to ensure they can efficiently manage the costs of insurance policies with signs of a switch away from credit cards. 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. Consumers pay monthly for a wide range of products and services and that is very much the case in the insurance market. 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.”
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