As household budgets continue to be squeezed, research from The Exeter shows that over a quarter (26%) of UK workers have cancelled insurance policies in the past year, citing financial pressure as the primary reason.
Compared with 2022, the number of workers cancelling policies in response to higher living costs has almost doubled from 4% to 7%. There has also been an increase in the number of people cutting back on pension contributions for the same reason, with numbers rising from 4% to 9%.
The 2023 Health and Financial Fears report also reveals a shift in consumer focus regarding insurance, with demand for private health solutions rising by 11% and cash plans by 5%, surpassing the demand for life insurance and income protection.
Greater awareness needed
Among those consumers who had cancelled policies in the past year, almost a quarter (24%) said they did so as they had never made a claim, 14% didn’t recognise the value of their cover, 12% could not specify their reasons for cancellation, and 5% were unclear about the purpose of the product. What’s more, less than half (49%) of UK workers were aware of the additional benefits often included in insurance policies that can be accessed without making a claim.
Given that well over a third (40%) of surveyed individuals prioritise affordability when considering insurance products, it’s crucial that consumers fully understand the products they are purchasing and the benefits they offer for the price paid.
Steve Bryan, Director of Distribution and Marketing at The Exeter, commented: The increase in the number of people who state they have cancelled insurance products due to financial pressures is disheartening but not surprising in the current economic climate.
“More concerning are the number of people who state they have cancelled a policy because they did not see value in the product they had purchased - including those who had not claimed. This highlights the valuable role that advisers play when recommending cover to clients. It also underlines the need for insurers, advisers, and policyholders to build ongoing relationships throughout the life of a policy.
“Frequent adviser reviews of a client's needs and regular engagement from insurers are key to ensuring that cover remains fit for purpose and that policyholders are fully aware of the benefits offered within their policies.”
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