Huge increase in SMEs using credit to pay for insurance

The number of SMEs using some form of credit to pay for one or more insurance policies has significantly increased, according to new research from Premium Credit.

The data, 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 is 65% higher at nearly £1,945 compared with £1,180 last year.  Two years ago, the amount borrowed was £1,080, and it was £1,130 three years ago.

More than six out of 10 (61%) surveyed said they have used more credit to help pay for business insurance over the past year, with one in eight (12%) saying it is significantly more.

More than two in five (41%) of the firms we surveyed said they are using more credit because of premium increases. But that is down on 51% in last year’s index as premiums are generally decreasing for businesses. Around 28% said they had taken on more credit because credit has become cheaper, while 26% blamed the impact of increases in employers’ National Insurance, which came into effect last April. Around a fifth (22%) pointed to the impact of increases in the national minimum wage.

Around two out of three (68%) of SMEs use credit cards, up from 45% the year before, while the numbers using personal or business loans rose to 35% from 21% previously. The risks of borrowing on credit cards and loans are highlighted by the research, which found 26% of SMEs had defaulted on repayments in the past 12 months.

The research shows the consequences of being underinsured or cancelling policies. Around two out of five (39%) said they have been unable to claim for damage to property or equipment in the past five years, either because they were not insured or their insurance was inadequate. For around 24% of those, unable to claim the damage was valued at £3,000 or more.

Owen Thomas, Chief Sales Officer, at Premium Credit said“Credit is playing a very significant role in ensuring SMEs can pay for insurance with 90% of firms using some form of credit to pay for one or more policies.

“A major factor is the financial challenges SMEs are facing including tax rises, but firms are also realising that credit is a sensible method of paying for insurance with premium finance and credit from insurers playing a major role.

“The alternative of being uninsured or underinsured comes with a cost as the research shows with significant numbers of SMEs unable to claim for damage and paying the costs themselves.”

The percentage of SMEs that used credit to buy insurance, and the products they used it for

TYPE OF INSURANCE	OVERALL PERCENTAGE OF SMES BY INSURANCE USING CREDIT TO PAY FOR THEIR COVER – MARCH 2026	OVERALL PERCENTAGE OF SMES BY INSURANCE USING CREDIT TO PAY FOR THEIR COVER – MARCH 2025	PERCENTAGE POINT CHANGE BETWEEN MARCH 2024 AND MARCH 2025
Vehicle insurance	75%	43%	+32%
Property insurance	65%	31%	+34%
Employer liability insurance	64%	24%	+40%
Public and product liability	59%	23%	+36%
Cyber insurance	46%	17%	+29%
Business interruption insurance	43%	15%	+28%
Some form of specialist insurance	38%	No comparison	Not applicable
Other financial lines	32%	11%	+21%
D&O cover	29%	12%	+17%
Key man insurance	26%	10%	+16%