New data has shown that more consumers are turning to borrowing to pay for insurance policies as the cost of living and energy bills continue to rise.
A study undertaken by Premium Credit showed that two in five (40%) of its customers were using some form of credit to pay for insurance policies - and borrowing more than they had in the previous year to do so, with 1 in 8 (13%) borrowing an additional £500 or more. Just 2% of those who used credit to pay for insurance policies said they were borrowing less to do so this year.
Most reported that the ongoing cost of living squeeze and rising energy bills were the reason behind increased borrowing, with almost a quarter (23%) specifically blaming rising energy bills.
Fewer people blamed the cost of cover than the last Premium Credit Insurance Index, however: last reported in May, around 27% blamed the cost of cover for their need to borrow more but just 11% said the same this time.
Around 6% who used credit to pay for one or more insurance policy said they had defaulted on repayments during the past year while 7% fear they will miss repayments in the year ahead.
Some customers have had to cancel policies they can no longer afford – around 5% have cancelled buildings insurance and 2% have cancelled contents cover. That compares to 3% for buildings insurance and 3% for contents cover in the last index and 5% and 7% respectively in research conducted by Premium Credit in March 2021.
Adam Morghem, Premium Credit’s strategy, marketing & communications director said:
“Rising interest rates, the cost of living squeeze and eye-watering energy bills are having a major impact on how people pay for insurance with rising numbers borrowing more to ensure they keep important cover, but not always considering the most efficient payment options available to them.
“Our existing support for vulnerable customers is tried and tested, and we are reviewing what additional support is appropriate during this time of uncertainty."
