Nearly one in five consumers have cancelled or cut back on insurance policies during the pandemic, according to research from Premium Credit.
A survey of 1,000 adults in August found 19 per cent had cancelled or cut policies, including life and health insurance, as a result of the pandemic.
Premium Credit warned many households were “taking risks” with their finances to afford insurance, with 44 per cent saying they paid for them with credit cards.
The research also found that consumers who used credit to pay for insurance were, on average, using £520 more credit than 12 months ago.
Rising premiums was cited as the main reason for people taking out more credit, with 35 per cent of borrowers saying that prices had increased.
Adam Morghem, strategy and brand director at Premium Credit, said: “The financial pain of Covid for millions of households is mounting and insurance is one of the bills that people are cutting back on to save money.”
Protection advisers had been warned earlier this year to expect higher levels of commission clawback, as consumers look to tighten their purse strings wherever possible in the aftermath of the pandemic.
After the first lockdown began the Association of Mortgage Intermediaries (AMI) also warned of clients cancelling their protection insurance direct debits as a result of financial difficulty during the pandemic.
But even before the lockdown some consumers had increased borrowing to cover insurance costs, according to Premium Credit’s research, as a March survey found that 41 per cent of customers who had increased borrowing to pay for insurance did so due to higher premiums.
Its own index also found a “growing reliance” on credit, with a quarter of customers borrowing money to pay for insurance before the pandemic, which had since caused an additional 5 per cent to take out credit.
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