More than half (51%) of the construction sector’s SMEs are relying on some form of credit to fund their insurance coverage, making the sector the biggest borrower, according to a new study.
The results from Premium Credit’s insurance index found that the average construction firm borrows an average of £1,130 for insurance. That said, around 13% of construction SMEs who use credit for insurance said that they have borrowed over £3,000 to fund their coverage.
In total, construction firms accounted for 12% of all net advances from Premium Credit last year, a figure that remained steady from 2020 and 2021. Close on its heels is the professional and scientific sector, which also accounted for 12% last year, representing a small rise from 10% in 2021 and 9% in 2020. Rounding out the top five were manufacturing, land transport, and wholesale and retail trade.
The report also found that one in four have reduced their level of cover across a range of insurance lines; vehicle, property, and public and product liability are the lines most likely to be hit. Around a third (32%) of SMEs that reduced their cover also cancelled at least one policy. Meanwhile, up to 10% said that they plan to increase their level of cover in the year ahead.
“Insurance is vital for business operations as demonstrated by the near 20% growth in net advances we have seen year on year. It is particularly important in the construction sector which accounts for how much lending we do in the sector,” Premium Credit chief sales officer Owen Thomas said.
Another study from the insurance financier also revealed that SMEs are continuing to suffer over late payments of invoices.
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