These include all the major reasons for default such as accidents, illness, death and loss of employment.

The Lending Works Shield is designed to safeguard investors’ funds in the event of another major market downturn, where loan repayments may be harder to collect and arrears can rise.

The upgraded insurance offering is supplied by a consortium of three UK household name insurers, all regulated by the Financial Conduct Authority and Prudential Regulation Authority.

Borrowers with higher than average credit scores have a one in ten chance of missing at least one repayment during their loan, according to new research from Lending Works, conducted in partnership with Equifax, the credit reference agency.

The research looks at the repayment data of 2 million peer-to-peer personal loans written in the UK over the past five years. The research shows that in the event of a major market downturn, it is likely that relying on a reserve fund alone would require a lender to reserve up to 5 per cent of its loan book in order to protect all of its customers.

Nick Harding, founding CEO of Lending Works, said: “It is our job to make customers feel confident about saving with us, and the Lending Works Shield goes a long way towards achieving this…Even as peer-to-peer lending becomes an ever more familiar feature of everyday consumer finance, it concerns us that some consumers still worry about how safe their money will be if they choose peer-to-peer over a bank’s savings account. Without action this is a stigma that we risk, as an industry, not being able to shake.

“Interest from savers in peer-to-peer lending continues to soar. The amount saved on our platform has increased by over 30 per cent every month since the summer and we lent almost £1 million in October.”