"Energy bill price rises, and now interest rates, have been major concerns for much of this year and people have already taken action to prepare for winter."
Insurance costs are being targeted during the cost of living crisis as people focus on their energy bills this winter, new research from Premium Credit shows.
Around 3% say they have already cancelled policies while 4% have switched to monthly payments for cover to make it more affordable. The same applies to the October price rises with 3% planning to cancel insurance policies and 3% planning to move to monthly payments.
Premium Credit’s Insurance Index shows 40% of customers who use some form of credit to pay for one or more insurance policy (some 12.6 million people) have borrowed more than they had in the previous 12 months for this purpose (only 2% say they have borrowed less). That is an increase on the 34% who said they had borrowed more in the previous 12 months when Premium Credit last reported in May this year. Nearly one in four (23%) blamed rising energy bills for increased borrowing.
Its research found customers are increasingly switching to monthly payments for insurance – 13% who used to pay for car insurance in a lump sum now pay monthly compared with 11% who used to pay monthly but now make a one-off payment. The comparable figures for home insurance are 13% and 10%.
Adam Morghem, Premium Credit’s strategy, marketing and communications director, said: “Energy bill price rises, and now interest rates, have been major concerns for much of this year and people have already taken action to prepare for winter.
“People are taking a practical approach with limits on heating and plans to wear more clothes indoors to keep warm, but people are also looking at a wide range of savings including showering less and cutting back on Christmas.
“Our existing support for vulnerable customers is tried and tested, and we are reviewing what additional support is appropriate during this time of uncertainty.
“Premium finance is specifically designed for insurance buyers to help make important insurance policies affordable and improve cashflow. Premium finance has become a very cost-competitive means for consumers to buy insurance and better manage their finances. At a time when household finances are under pressure it can be a good alternative to other forms of credit.”
