Six in ten UK small businesses forced to borrow to pay insurance premiums, new figures show

Monday, May 09, 2022 7:00 a.m.

Almost six in ten (59%) UK small and medium-sized businesses (SMEs) rely on credit to pay their insurance costs, due to rising premiums and falling revenues linked to the impacts of Covid-19.

On average, UK SMEs have borrowed £1,105 to pay insurance costs, while almost one in ten have borrowed more than £3,000 to ensure they are properly covered, according to new research shared exclusively with City AM

Of those who use credit to pay for their insurance, two-fifths (41%) use credit cards while a further 34% use funding from their insurers, according to figures from Premium Credit.

Overall, small businesses in the UK blamed Covid for their borrowing as 43% said they were using more credit due to the impacts of the pandemic.

Meanwhile, 29% said rising premiums forced them to borrow, while 28% said a drop in income caused them to use credit to pay for coverage.

The study found that 8% of those who said they had started borrowing money to pay their insurance costs said their premiums had risen dramatically, while 47% said they had experienced slight increases. of their bonuses.

In response to rising premiums, 15% reduced investment in their business while 14% reduced their level of insurance coverage.

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