Construction sector borrowing the most to fund insurance

New analysisfrom Premium Credit has shown that the Construction sector borrows the most to fund insurance but the Wholesale and Retail Trade sector is the fastest-growing.

Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, shows 55% of SMEs now use some form of credit to pay for insurance borrowing an average of £1,080. Around 15% of them say they have borrowed more than £3,000.

Construction firms were the most likely to use credit – they accounted for 14.3% of all net advances from Premium Credit last year. That was 1.5% higher than in 2022 and 1.9% higher than 2021.

The Professional and Scientific sector accounted for the second highest share of net advances at 12.5% last year followed by Manufacturing on 10.4%, Wholesale and Retail Trade on 8.8% and Land Transport on 8.1%.

However it’s the Wholesale and Retail Trade sector which is recording the most growth – its share of net advances at 8.8% is 1.7% higher than in 2022 and 3.4% up on 2021.

The Index research shows around 50% of SMEs say the cost of their business insurance has increased in the past 12 months with 12% reporting dramatic increases. Around 17% of firms questioned say they have cut other costs in their business as a result of insurance premium increases in the past two years.

Jon Howells Chief Commercial Officer at Premium Credit said “Insurance is vital for business operations across a wide range of sectors as demonstrated by the strong growth in net advances we have seen year on year. It is particularly important in the construction sector which is consistently the biggest sector for lending.”

Top five sectors for share of total lending to buy credit and how that has changed.

TOP SECTORS	SHARE OF TOTAL LENDING	DIFFERENCE TO 2022	DIFFERENCE TO 2021
Construction	14.3%	+1.5%	+1.9%
Professional and Scientific	12.5%	+0.5%	+2.2%
Manufacturing	10.4%	+0.8%	+0.9%
Wholesale and Retail Trade	8.8%	+1.7%	+3.4%
Land Transport	8.1%	+0.4%	-1%