The professional and scientific sector borrows the most to fund insurance premiums but the wholesale and retail trade delivered the most growth in terms of using credit for insurance costs, new research suggests.
Premium Credit's Insurance Index, which monitors insurance buying and how it is financed, shows 90% of SMEs use some form of credit when they buy insurance compared with 54% recorded in last year's index and 55% two years ago. The average amount borrowed has increased 65% to nearly £1,945 compared with £1,180 last year. Two years ago the amount borrowed was £1,080.
Professional and scientific firms were the most likely to use credit to fund insurance premiums, accounting for 14% of all loans from Premium Credit last year just ahead of construction companies which accounted for 13% of loans.
The wholesale and retail trade saw the most growth with its share of total lending from Premium Credit rising to 10% from 8% in the previous year and accounted for the third highest share of lending.
The manufacturing and land transport sectors recorded the fourth and fifth highest shares of total lending with manufacturing's share slipping to 9% from 10% while land transport was unchanged at 8%.
Premium Credit's Insurance Index shows 69% of SMEs report that the cost of their business insurance has increased in the past 12 months with 11% saying it has increased dramatically. Last year 51% said the cost of their insurance had increased with 10% saying it had increased dramatically.
Jon Howells, Chief Commercial Officer, at Premium Credit, said:
“Credit is playing an increasingly significant role in funding insurance premiums across a wide range of sectors as demonstrated by the continuing growth in loans we are seeing.
“The professional and scientific sector accounts for the biggest share of total lending but demand is strong in all sectors.”
