Consumers reducing coverage and letting policies expire: CII
A social media poll of 723 financial planners and insurance professionals conducted this month revealed how consumers are reacting to rising inflation rates, energy, food and fuel prices.
About two in five ICN members said they had seen a “significant increase” in consumers looking for the cheapest insurance premium as average wages failed to keep pace with inflation.
Meanwhile, one in five insurance professionals said consumers are reducing the amount of cover they buy to try to cut costs, according to CII.
Another 18% said an increasing number of policies were being allowed to expire.
Survey results show consumers are tightening their belts and pulling money out of their savings, with 43% of Personal Finance Society members saying their customers are cutting back on spending and 37% saying their customers are using their savings to meet rising costs.
A further 12% said customers had postponed their retirement plans and 8% said customers were increasing borrowing amounts to stay financially viable during the economic turmoil.
Matthew Connell, Director of Policy and Public Affairs at CII, said: “Many consumers have never seen costs rise at this rate. With such a significant reduction in disposable income, it makes sense to act now to making sure your finances are in the best shape But taking a hard look at your finances is essential rather than just spending less in the current climate.
“Rising debt levels or reduced insurance coverage today could cause consumers greater problems in the future and compromise their future financial resilience. Financial planners can help consumers review their lifestyle, meet current cost of living challenges and secure their finances for the future.
“We encourage any consumer who was considering canceling, reducing coverage or opting for the cheapest policy to discuss the long-term implications of such an approach with an insurance or financial planning professional. It’s critical that consumers grasp a short-term financial gain today could lead to significant long-term financial hardship.”