Construction firms lean heavily on credit to cover soaring insurance premiums
UK construction SMEs are relying more than any other sector on borrowing to cover the rising cost of insurance, according to new figures from Premium Credit.
Fresh analysis from the insurance premium finance provider shows that construction firms accounted for 13.8% of all SME insurance loans in 2024, maintaining their position as the most credit-reliant sector for this purpose. While this was slightly down from 14.3% in 2023, it remains above pre-2022 levels.
The data comes at a time when the construction sector is already battling tight margins, rising material costs, and high insolvency rates. Insurance is just one more cost many small firms are finding difficult to absorb upfront.
According to Premium Credit’s Insurance Index, more than half (54%) of SMEs now rely on credit to fund insurance, borrowing an average of £1,180—a slight rise from £1,130 in 2023.
“Credit plays a major role in funding vital insurance premiums,” said Jon Howells, Chief Commercial Officer at Premium Credit, adding that construction is “consistently the biggest sector for lending”.
Rising insurance costs add to pressure
The rising cost of business insurance is a growing concern across all sectors. Premium Credit’s latest survey found that 51% of SMEs reported an increase in premiums over the past 12 months, with 10% saying costs had gone up dramatically.
Construction firms — many of which already rely on asset finance to lease vital equipment or manage working capital — are feeling the pinch. Insurance cover, particularly for liability and indemnity, can be a major burden for firms working on tight cashflow and complex contracts.
Professional services surge in borrowing growth
While construction still dominates in overall borrowing, the Professional and Scientific sector has seen the fastest growth, rising to 13.3% of total loans—up 1.2 percentage points on 2022. Manufacturing, wholesale/retail, and land transport round out the top five sectors for insurance premium borrowing.
Leasing lays the foundation as UK construction sector feels the strain
"Construction firms lean heavily on credit to cover soaring insurance premiums" was originally created and published by Leasing Life, a GlobalData owned brand.
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