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Millions to cut their cover

23/ 6/2008

THE insurance industry should brace itself for a £1.5bn fall in revenue as more than a quarter of consumers are trimming back policies in response to the credit crunch, says a survey.

The poll by business analysts Deloitte discovered that 26 per cent of respondents are planning to reduce their spending on insurance policies in the next 12 months, which Deloitte said could amount to £1.5bn.

In a bid to cut costs worried consumers are trimming back many of their policies to the bare essentials. Around 18 per cent claim they will downgrade to third party-only car insurance.

Around 12 per cent of policyholders will look to make cut backs on their travel insurance and pet insurance will be trimmed down by eight per cent.

However, it is the controversial Payment Protection Insurance (PPI) policies that are most likely to be dropped by thrifty consumers, with 26 per cent of respondents planning to reduce or drop PPI in the next 12 months.

Health insurance was the least likely to be downgraded.