Premium Credit: one in seven drop insurance

Premium Credit said on May 20 that one in seven UK consumers have cancelled or decided against buying insurance in the past year as cost pressures continue to weigh on household budgets. The premium finance provider said its 2026 Insurance Index found 15% of customers had dropped or declined cover in the previous 12 months, up from 11% in the prior edition. The company said the figures point to a rise in underinsurance as consumers try to manage higher living costs. Premium Credit also said some households that cut cover later faced losses they could not claim for. ### How big is the increase in people dropping cover? Premium Credit said 15% of UK consumers had cancelled or decided not to proceed with some types of insurance in the past year, compared with 11% a year earlier. The company described that as evidence that affordability pressures are changing buying decisions across the market. (insurancebusinessmag.com) The May 2026 index said 76% of consumers now use some form of credit to pay for insurance, while average borrowing by consumers increased 26% to more than 500 pounds. Premium Credit said that borrowing growth showed how households were spreading costs rather than paying annual premiums in a lump sum. (insurancebusinessmag.com) ### Are people cutting cover because they no longer need it? Premium Credit said at least 20% of consumers who cancelled a policy still needed the cover they gave up. The company said that indicated decisions were being driven by affordability rather than by lower risk or changed circumstances. (premiumcredit.com) Jon Howells, chief commercial officer at Premium Credit, told Insurance Business that cancelling policies to save money could be “a false economy.” He said the cost of an uninsured claim could outweigh the short-term saving from dropping cover. (insurancebusinessmag.com) ### What happens when people go uninsured or underinsured? Premium Credit said nearly one in eight UK adults had, in the past five years, been unable to claim for damage to property or belongings because they had no insurance or inadequate cover at the time of loss. That compared with 8% in the previous year’s index, according to the company. (insurancebusinessmag.com) The same data showed 45% of those who missed out on a claim said the loss would have been worth more than 1,000 pounds, while 23% said the value was 3,000 pounds or more. Premium Credit said those figures showed the financial cost of going without cover could exceed the savings made by cancelling a policy. (insurancebusinessmag.com) ### Why is Premium Credit focusing on monthly payments? Premium Credit said premium finance lets policyholders spread the cost of an annual policy into monthly instalments instead of paying the full amount upfront. The company said that structure can help households manage cash flow and avoid gaps in cover at renewal, though it involves a charge for the credit facility. (insurancebusinessmag.com) The 2026 index said 55% of consumers relied on credit cards to pay for insurance, up from 41% in 2025, and 11% of those using credit cards or loans had defaulted on payments, up from 6% a year earlier. Premium Credit said the data reflected broader financial strain among customers using borrowing to maintain protection. (insurancebusinessmag.com) ### Where did the data come from? Premium Credit said its May 2026 Insurance Index was based on national research conducted in March among 1,000 adults aged 18 and over and 1,000 small and medium-sized enterprises. The company said the study examined how credit is being used to pay for insurance and the pressures facing personal and business customers. (premiumcredit.com) The May 2026 report is the latest edition of Premium Credit’s Insurance Index, which the company said it has run since October 2020. The findings were published in the company’s report and cited by Insurance Business on May 20. (premiumcredit.com)