A new report from finance provider Premium Credit has revealed that more customers are relying on credit to pay for their insurance costs in response to rising premiums and a “growing squeeze” on household finances.
According to the report, nearly seven out of 10 (69%) people over the past year used some form of credit to pay for one or more insurance policies. It also found that one in four borrowed more than they had in the previous 12 months to pay for insurance.
Premium Credit also said in its report that some people may rely on credit more to fund their coverage going forward, as about a third of adults (29%) surveyed believe their household income will fall over the next 12 months. Some 41% of those who use credit to pay for cover said that premiums have risen since the COVID-19 pandemic began. Nearly half (49%) say their premiums have stayed the same or fallen.
About 73% of customers who have seen their premiums rise said they have shopped around more to find more affordable cover, the study said. But only 13% said they changed items or got rid of them to help reduce the cost of insurance. Twelve per cent (12%) increased their claims excess, and the same percentage reduced their level of cover.
Tough times have also led to some cancelling their coverage because they were unable to afford it – around 4% of those who use credit to fund insurance have cancelled buildings insurance, Premium Credit found. Another 3% have cancelled contents cover. In spite of these figures, Premium Credit pointed out that this is an improvement from when it conducted a similar study in March, which found that 5% had cancelled or amended buildings insurance and 7% had cancelled or amended contents insurance.
The study stated that credit cards are the most popular form of borrowing among insurance customers, at 36%. Another 23% rely on finance offered by their insurer, while 9% use personal loans, and 6% indicated that they have borrowed from friends and/or family.
Premium Credit’s new findings echo a similar trend the finance provider found in an earlier report published in June. In that report, Premium Credit noted that SMEs have also increasingly turned to credit to pay for their rising insurance costs.
