Nearly half of people using credit to pay for their insurance

New data from Premium Credit has shown that 44% of insurance customers are using credit or are reliant on finance from insurers and premium finance companies.

The research showed that nearly six out of ten (57%) consumers use some form of credit to pay for one or more policies they have.. Whilst  44 per cent of those are using finance from insurers or premium finance providers, compared with 27% using credit cards.

The number using credit cards has dropped from 40% over the same period. The research found 15% of those who use credit in some form to pay for insurance have been rejected for credit cards or offered a higher rate than they applied for in the past 12 months.

Use of credit is highest among home and car insurance customers – 30% of customers with home and 29% with car insurance use some form of credit to pay premiums. Around one in five (18%) pet insurance policyholders pay with some form of credit, and 17% of life insurance customers also do so.

The study found that one in six (16%) who use credit to pay for insurance policies borrowed more than they had in the previous 12 months. That is significantly lower than the 41% who said they had borrowed more in last year’s index. The key reason for increased borrowing this year, cited by 39% was a general rise in insurance costs, although a third (33%) blamed cost-of-living pressures.

At the time of asking, around half (48%) of car insurance customers said the annual cost of their policy increased at their last renewal, while 50% of home insurance customers said their annual costs increased, the research found.

Owen Thomas, Chief Sales Officer, Premium Credit, said: “Customers are increasingly turning to finance from their insurer or premium finance provider to ensure they can efficiently manage the costs of insurance policies, with signs of a switch away from credit cards.

“The majority of insurance customers use some form of credit to pay for one or more of their insurance policies, and increasingly they are looking for alternatives to credit cards and bank overdrafts to help them budget.”