One in five UK consumers have cancelled or reduced their insurance policy as a result of the financial implications caused by coronavirus, according to Premium Credit.
Moreover, the data outlines that the average household’s total insurance costs have risen by 14% year-on-year to £1,045.
The company’s insurance index outlines that 25% of customers, before the pandemic, borrowed money in order to pay for their insurance. This figure has now increased to 30%.
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Furthermore, the consumers who have used credit to pay for insurance, on average, now have to borrow £520 more than 12 months ago.
The research shows that 44% of individuals who borrow in order to pay for their insurance, do so through the use of credit cards, while 53% use a monthly direct debit finance offered by insurers.
Adam Morghem, strategy and brand director of Premium Credit, said: “The financial pain of COVID-19 for millions of households is mounting and insurance is one of the bills that people are cutting back on to save money.
“The affordability issue was already a major concern for households before the pandemic with average bills rising 14% in a year – way ahead of inflation – and making it more difficult for people to pay for the insurance they need and value.”
Owen Thomas, chief sales and marketing officer at Premium Credit, added: “Premium finance has become a very cost-competitive means for consumers to buy insurance and better manage their finances through spreading payments.
“At a time when insurance is becoming more expensive it can be a good alternative to other forms of credit.”