Insurance customers more accepting of using credit

12th July 2023

Insurance customers are becoming more accepting of using credit to buy cover as financial confidence grows and credit becomes more available, new research from the Premium Credit has indicated.

Around a quarter (24%) of customers say that over the past year they have become happier about using credit to fund cover which is slightly higher than the 23% who told last year’s Premium Credit Insurance Index they had become more accepting about using different forms of credit. 

However, this year’s study found accessing credit such as credit cards, mortgages and loans is becoming more difficult for some. Around one in seven (14%) of adults say they have found it harder to borrow since the start of the cost of living crisis. More than one in six (17%) said they have been rejected for cards.

Premium Credit’s data shows 70% of adults use some form of credit to pay for one or more types of cover including credit cards and loans as well as premium finance and finance from insurers. Its Insurance Index, which monitors insurance buying and how it is financed, found that the numbers of people using some form of credit to pay for one or more insurance policy was 66% in March 2022 and 69% in October 2021.

The research found the growing acceptance of using credit to fund insurance is being driven by people becoming more financially confident. More than a third (35%) of those who are more accepting of using credit say it is because they have become more financially savvy while 33% say more credit is available. A fifth (20%) say they are better off and more comfortable using credit.

Another possible explanation from the research is people are running down savings – more than two out of five (41%) of those questioned say their level of savings has dropped since the cost of living crisis started while 12% have no savings. Around 17% say their level of savings has dropped dramatically while just one in five (20%) say the amount of cash they have saved has increased over the period.

Premium Credit is advising customers to consider premium finance which, for a small charge, enables them to pay monthly for cover instead of in a lump sum. Spreading payments in such a way can help ease cash flow challenges and make paying for vital insurance simpler. 

Adam Morghem, Premium Credit’s Strategy, Marketing & Communications Director said “Using some form of credit to pay for one or more insurance policy is widely accepted although many people may be unaware they are using credit when they finance from their insurer.”

“While customers are becoming confident about using credit to buy insurance there is a growing issue that getting credit and credit cards in particular is becoming more difficult.”

“Premium finance is specifically designed for insurance buyers to help make important insurance policies affordable and improve cashflow. It is a very cost-competitive means for consumers to buy insurance and better manage their finances through spreading payments.”