UK:Policyholders cancel insurance due to financial pains

Nearly one in five policyholders in the UK have cancelled or cut back on insurance policies as the financial impact of the pandemic increases the pressure on their spending.

According to a new study by Premium Credit, 19% of consumers have cancelled or cut policies directly as a result of the pandemic. While travel insurance is the worst affected, customers have also cut important home and car cover as well as pet, life and health insurance.

Premium Credit’s insurance index research has highlighted that even before the onset of COVID-19 insurance customers were feeling the strain – analysis of the most recent government data shows the average household’s total insurance costs increased 14% year-on-year to GBP1,045 ($1,387).

The index, which monitors insurance buying and how it is financed, has found a growing reliance on credit. Before the onset of the pandemic, around one in four customers (25%) borrowed money to pay for their insurance - the pandemic has driven another one in 20 (5%) to take out credit. The research also found that, of the consumers that have used credit to pay for insurance, on average are using GBP520 more credit than 12 months ago – a significant rise.

The reliance on credit for insurance underlines how important customers believe it is – around 61% say paying for their insurance is a high priority in their household finances. Rising premiums are the main reason for people taking out more credit, with 35% of those who have borrowed money saying prices have increased.

Premium Credit’s strategy and brand director Adam Morghem said, “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.”

Premium Credit chief sales and marketing officer Owen Thomas said, “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.”

Source: Asia Insurance Review