Small and medium enterprises (SMEs) are shifting to monthly insurance payments owing to rising premiums, as revealed by recent research.
- Research by Premium Credit highlights a growing trend among SMEs towards monthly insurance payments due to increased financial pressure.
- A significant 43% of SMEs now find value in monthly premium payments, compared to a 32% preference for lump sums.
- More than half of the SMEs reported a rise in insurance costs over the past year, with some describing dramatic increases.
- Businesses are resorting to cost-cutting measures, including reduced coverage and increased policy excesses, to manage these expenses.
In an environment of escalating financial pressure, small and medium enterprises (SMEs) are increasingly opting to pay their insurance premiums on a monthly basis. Recent findings from Premium Credit reveal that this trend is gaining traction as a strategic response to rising insurance costs. An impressive 43% of SMEs value the flexibility offered by monthly payments, a stark contrast to the 32% who prefer paying in a lump sum.
Over the past year, more than half of SMEs have experienced an increase in their total insurance costs, with 12% reporting significant hikes in premiums. This financial strain has compelled nearly one-sixth of businesses to make operational cuts, including reducing staff and scaling back on investments, in order to sustain their insurance payments.
Moreover, this shift towards monthly payments is not merely a reaction to the current financial landscape. It is considered by many SMEs as a prudent financial management strategy. Adam Morghem of Premium Credit pointed out that paying for insurance on a monthly basis offers advantages such as improved cash flow and financial predictability, which benefits businesses even in the absence of rising costs.
Companies that cannot absorb increased premium costs have resorted to other measures, such as reducing their level of coverage or increasing policy excesses, to alleviate financial pressure. This trend suggests that while monthly payments provide immediate relief, they may not be a panacea for all financial challenges faced by SMEs.
Despite the apparent benefits of monthly payments, a quarter of SMEs remain undecided on their preferred payment method. This reflects a broader uncertainty in the business community on how best to navigate the challenges posed by rising insurance expenses.
The shift to monthly payments by SMEs is a pragmatic approach to managing rising insurance costs, reflecting broader trends in financial strategy.
