Research reveals huge potential for growth in UK premium finance market
New research from Premium Credit reveals that 62% of people have not heard of premium finance, though only 51% claim to pay for their insurance in a single payment. When it comes to SMEs, the corresponding figures are 43% and 45%.
For a small charge, a premium finance loan allows you to spread the cost of your cover monthly instead of paying for it all in one go.
However, when it was explained to those that have not heard of or used premium finance, 20% of consumers said they would definitely use it in the future, and 38% were undecided. Only a minority of 42% said they would not use it. The findings are even more impressive for the SME sector where 59% of those that have not heard of premium finance or used it think they will in the future, with only 24% saying they definitely wouldn’t and 17% are undecided.
Premium Credit says the opportunity to grow the premium finance market is very strong as it estimates seven million people and up to 1.3 million SMEs have cancelled one or more insurance policies over the past 12 months and not replaced them because they could not afford the premiums. In total it believes over 12 million people and two million SMEs cut back on insurance cover in 2018 because of cost.
Adam Morghem, strategy and marketing director at Premium Credit said: “Insurance premiums have been rising and millions of people and SMEs are struggling to pay for their cover. Premium finance is a great way for many people to spread the cost of their insurance, but our research shows awareness amongst consumers and SMEs is very low.
“More needs to be done to raise awareness of premium finance and its many benefits.”
Steve White, chief executive officer, British Insurance Brokers’ Association said: “It is worrying that so many consumers and SMEs are cancelling insurance because of the cost and risking being under-insured or having no insurance at all. Our 2019 manifesto has identified that there can be financial challenges for some people in accessing insurance and we are committed to improving financial inclusion in this area.
“Premium finance can play an important role in helping more consumers and businesses to access the important financial protection they need and supports brokers in providing expert advice on their insurance needs.”