Amid rising insurance costs, SMEs are transitioning to monthly payments, a research initiative by Premium Credit reveals.
- A substantial 43% of SMEs favour the convenience of monthly instalments over lump-sum payments.
- Over half of SMEs have reported an increase in insurance premiums, with a notable percentage witnessing dramatic hikes.
- In response to surging costs, businesses are resorting to cost-cutting measures, including reducing cover and increasing excess.
- The adoption of premium finance solutions offers SMEs enhanced financial management flexibility.
The escalating costs of insurance premiums are prompting small and medium enterprises (SMEs) to reassess their payment strategies. According to recent findings by Premium Credit, a significant portion of SMEs—43%—prefer monthly payments facilitated through premium finance to the traditional lump sum method. This shift is indicative of a growing trend towards financial adaptability in the face of rising expenses.
Data indicates that more than half of these businesses have experienced an increase in total insurance costs over the past year, with 12% of SMEs encountering substantial hikes. Conversely, a mere 2% have seen a reduction in their insurance bills, underscoring the pervasive nature of the issue.
These rising costs have compelled nearly 16% of SMEs to implement budgetary cuts across their operations. Specifically, 14% have reduced the scope of their insurance cover, and 13% have opted to increase their policy excess. Such measures are being adopted as businesses strive to maintain financial stability.
Looking forward, many SMEs anticipate continuing these cost-saving strategies. Approximately 17% plan to further pare down expenditures, while 14% might decrease their insurance coverage levels. Notably, 10% of businesses are contemplating policy cancellations, and 8% face the potential need to downsize their workforce.
Adam Morghem, representing Premium Credit, highlighted the advantages of monthly payment models, asserting that they provide SMEs with greater control of their financial obligations. He emphasised that this approach is beneficial even in stable economic conditions, as it allows businesses to better manage their cash flow through distributed payment schedules.
In summary, SMEs are increasingly leveraging monthly payment schemes to navigate the challenges posed by rising insurance costs.
