Paying for insurance with credit is continuing to gain popularity with customers valuing the ability to pay insurance bills monthly, new research1 from the UK’s leading premium finance company, Premium Credit, shows. Its Insurance Index found 28% of adults say they are more accepting of using credit to pay for insurance cover than they were a year ago confirming a growing market trend. Last year’s index2 found 26% saying they were more accepting of using credit compared with 21%3 two years ago and 15% who said the same in October 20224.
The research found 46% of insurance customers value the ability to pay for insurance in monthly instalments including 18% who do so for all their insurance cover. The main reason for doing so identified by nearly half (49%) is that it helps with budgeting while 30% say it improves cashflow. That could prove valuable in the 12 months ahead – around 27% of adults said they think their standard of living and ability to pay regular bills will deteriorate while half (49%) worry that increases to their personal tax bill will affect their standard of living.
Premium Credit’s Insurance Index, which monitors changes to insurance buying trends, found 14% of car insurance customers had switched to paying monthly in the past 12 months while 9% had switched to paying monthly for home insurance. The main reason for doing so for both was affordability with 50% of car insurance customers and 41% of home insurance customers choosing that reason.
The key reason for customers becoming more accepting of using credit to pay for insurance, the index found, was that it helps with managing money. Around 56% gave that reason compared with 38% pointing to the rising cost of living. Around a quarter (25%) say they are more comfortable with using credit now they are better off while 21% highlight increases in insurance costs as the reason to use credit.
Jon Howells, Chief Commercial Officer at Premium Credit said: “The growing acceptance of paying for insurance with credit is firmly established and it goes hand in hand with the numbers of people valuing the ability to pay monthly for cover. Insurance customers are switching to using credit mainly as it aligns payments to money coming in and helps with budgeting given other cost of living pressures they face. Whether premiums are going up or down, and we are seeing a decrease with car insurance premiums currently, it is the ability to use premium finance to manage payments on a regular basis that consumers find helpful. When compared to other forms of credit such as credit cards or overdrafts premium finance continues to be competitively priced and helps customers manage their money.”
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