Consumers not engaging with insurers before cutting back on cover

Around a third (31%) of consumers have cutback on insurance products in the last 12 months, new figures have revealed.

The data, which was published by Deloitte yesterday (10 October 2023), said life insurance was the most commonly cancelled product among consumers (8%), followed by mobile (7%) and pet insurance (7%). 

Motor, buildings, and contents insurance, however, have been more resilient since they are a requirement for motorists and mortgage payers.

The consulting firm said the cutbacks over other products came due to customers facing financial pressures as premiums rise.

However, it also found that 39% of insurance customers did not receive any practical guidance in situations when their financial circumstances changed.

It found that insurance customers were also opting to seek support from other sources before contacting their insurer, including 15% resorting to social media.

“Reducing pension contributions and cancelling insurance products may seem like a solution in the short-term, but individuals will need support to understand how they can recoup these losses to avoid significant impact longer-term,” Andy Masters, head of insurance at Deloitte, said.

“Insurance providers and banks need to encourage customers to engage with them – customers aren’t always aware of what’s available and don’t necessarily reach out to their provider for support.”

‘Risky decisions’

Deloitte obtained the figures from its survey of over 2,500 UK consumers, which was conducted in August 2023.

It aimed to understand the impact of the rise in the cost of living on banking and insurance customers.

The firm found that  20% of 18-24 year olds have invested money based on social media recommendations, with almost half of these (48%) having invested between £100-£500 and 16% invested over £1,000 in their lifetime.

Margaret Doyle, chief insights officer of financial services at Deloitte, said: “It is troubling that, instead of reaching out to trusted providers, many people are turning instead to what is often unregulated financial and investment advice from ‘finfluencers’ on social media.

“With the rise of technologies like deep fakes, relying on social media for advice makes people vulnerable to scams, phishing and risky financial decisions.

”There is financial education and support available from government agencies, banks, insurers, investment managers and charities.”