One in five insurance professionals claim the cost of living crisis is causing customers to cut back on cover, according to a survey of Chartered Insurance Institute (CII) members.
The social media poll of 723 financial planners and insurance professionals also found 18% of those polled claimed a growing number of policies were being allowed to lapse, meaning a growing number of consumers no longer had the financial safety net of an insurance policy.
And according to the findings, around two out of five respondents said they had seen a significant increase in the volume of consumers shopping around for the cheapest policy premium as the average wages failed to keep pace with inflation.
The survey also showed 43% of respondents were seeing clients reduce their spending, with 37% saying they had seen clients pull cash out of their savings to cope with increased costs, while 12% had postponed their retirement and 8% increased borrowing to keep going in the current economic climate.
Matthew Connell, director of policy and public affairs of the CII, said the response was understandable as many consumers have never seen costs increase at this speed.
“With such a significant reduction in disposable income it makes sense to act now to ensure your finances are in the best shape possible,” he said.
“But taking a good, hard look at your finances rather than just spending less is essential in the current climate.
“Increasing debt levels or cutting back on insurance cover today could cause consumers more serious problems in the future and compromise their future financial resilience.”
He added: “We would encourage any consumer who was considering cancelling, reducing their cover or going for the cheapest policy to discuss the long-term implications of such an approach with an insurance or financial planning professional.
“It is vital consumers grasp a short-term financial gain today could result in significant long-term financial pain.”
