Insurance firms could face huge losses
According to a recent report the insurance industry could be facing huge losses as a result of the global credit crunch, with tighter household finances forcing many consumers to either downgrade or cancel their insurance cover in order to make ends meet each month. A survey was carried out by officials at Deloitte, and showed that around one if every four consumers were planning to either cut or cancel insurance cover in order to save money at what has become a very financially turbulent time.
Officials claim that the insurance industry as a whole could be facing losses of around £1.5 billion as a result of the situation. The results of the poll showed that around 26% of consumers were looking to either cut back on cover, such as downgrading their vehicle insurance cover to a lower and cheaper level, or were thinking cancelling some policies such as Payment Protection Insurance, which can work out to be very costly. It is thought that the PPI industry will be the area of insurance that is hardest hit.
With vehicle insurance cover having gone up by around 8% this year, around 18% of those involved in the research said that they would try and make savings by downgrading to the next level or even to the cheapest level, which is third party only cover. Over the next twelve months around 26% of those involved in the research said that they would downgrade or cancel their Payment Protection Insurance policies, which are designed to cover debt repayments in the event that the policyholder cannot work and make repayments for a period of time due to redundancy or ill health.
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