Brits are dealing with the cost of living crisis by cutting down on their insurance cover, according to new findings by NerdWallet.
The price comparison experts asked 2,000 Brits how they were coping with the current financial pressure, and found that almost three in 10 (29%) of us have stopped or reduced the our insurance cover over the last 12 months, with 11% of us planning to do so when our renewal is due. Top of the list to cut or reduce is life insurance (41%), closely followed by home insurance and car insurance (both 38%).
The biggest cause behind cutting back on insurance payments has been the cost of living crisis, with 45% of survey respondents citing it as their main reason. It could also be due to the increases in the price of several types of insurance itself, considering a large majority (66%) of those surveyed saw their insurance costs either slightly or significantly increase in the past year.
Insurance isn’t the only expense Brits are deprioritising; the research also showed a decrease in people’s payments in their savings, pensions, and investments, with 45% having stopped or reduced those payments in the last year. According to the survey, this is also due to the rising cost of living, with 62% citing it as the main reason to stop paying into their savings.
Other industry data suggests that mass cancellation might not be so widespread.
Those brands in the private healthcare insurance sector report strong inception rates and increasing profits. Last September Quotezone reported a 45% increase in demand for health insurance. As the pandemic closed NHS wards and extended waiting lists, ActiveQuote reported a 78% increase in demand in late 2020.
The NHS continues to work poorly in many respects, so expect that private health insurance demand to increase and people to find the extra money for healthcare, minor operations and dental treatment as NHS resources are rationed. IE suggests that the higher rate tax cuts for higher earners will see some of that cash funnelled into wraparound family healthcare, dental and eyesight plans in the future.
Direct Line’s 2021 results recorded a 2.9% increase in Home cover policies and a healthy 7.5% increase in Commercial policies being incepted.
Ripe Thinking reported in July 2022 that its new product Ripe Caravan had attracted some 24,000 policyholders in year one.
POOR HOUSEHOLD MANAGEMENT?
Overall, the cost of living crisis seems to have made it difficult to look to the future, with the majority (43%) admitting they are thinking more short-term than before, says Nerdwallet.
While insurance payments and saving pots are being cut, some more immediate comforts might soon be the next to go, with most people saying they would ditch their streaming service like Netflix or Disney + (42%) if they were to cut their spending any further.
Does anyone believe that any parent could get away with cancelling Disney for their kids? That’s like saying Christmas is cancelled. People find the money.
Connor Campbell, personal finance expert at NerdWallet, said,
“It’s not a huge surprise that people are saving where they can at the moment, and reducing the amount they spend on insurance can be seen as a quick fix in order to cut outgoings. However, it’s important not to completely cancel something you need – or reduce it to the point where it is no longer fit for your purpose. For example, reducing car insurance to third party only is a good way to cut down on the initial cost, but you should always make sure you can cover the cost of fixing or replacing your vehicle should the worst happen. The same applies with home insurance – make sure you are covered for all the belongings you need or want to replace.”