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Consumers look to save money by trimming back insurance policies

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by Kay Mitchell

Over a quarter of consumers are looking to save money by cutting back on their insurance policies following the credit crunch.

As a result, the insurance industry is facing a £1.5 billion according to a survey by business analysts, Deloitte.

The survey, which was carried out last month by YouGov on 2286 adults, established that 26% of respondents plan to cut their spending on insurance policies over the next year.

The poll found that worried consumers are cutting back many of their policies to the minimum with 18% claiming they will downgrade to third party-only car insurance.

Furthermore, the much-talked about payment protection insurance policies (PPI) are likely to be cancelled by 26% of consumers looking to cut back.

PPI has been the result of bad press lately after a report revealed that 2 million customers have been sold potentially worthless PPI.

The policies cover monthly payments for goods, services or loans during illness and redundancy.

The Office of Fair Trading, the Competition Commission and Which? say they have found evidence of massive mis-selling.

The survey also discovered that approximately 12% of policyholders will look to make reductions in their travel insurance while pet insurance will be trimmed down by 8% of those polled.

However, health insurance was the least likely to be downgraded as less than one in 10 of those surveyed are looking to better deals on their policies during the next 12 months.

Commenting on the findings, David Rush, insurance partner at Deloitte, said it is understandable that many consumers are looking to cut back on items but they should carefully consider about which types of insurance are needed in a downturn.

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News posted: June 23, 2008

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