UK insureds consider dropping policies to fight inflation
More than half of surveyed consumers are likely or somewhat likely to cancel a policy to save money, Guidewire reports.
As consumers worldwide continue to feel the pressures from supply chain snarls and cost of living increases, around half (48%) of U.K. consumers said they would look to cut costs by eliminating nonmandatory insurance coverages, according to a survey from Guidewire.
Travel insurance is the most likely type of coverage to be dropped, with 18% of consumers saying they are likely to cut travel coverage. Additionally, 17% said canceling home content coverage would help them save money. Guidewire noted this provides an opportunity for insurance companies to provide more tailored policies that can help reduce cost-of-living expenses for policyholders feeling inflationary pressures.
Further, Guidewire reported that 16% of U.K. policyholders would cut bicycle insurance to save money.
Necessary ‘inconvenience’
The survey also found that 36% of consumers find insurers to be necessary, but inconvenient, while a quarter said the industry sells “overpriced products and is reluctant to pay out a claim.” Around a quarter of consumers held positive views of the industry.
What makes this concerning is that 88% of U.K. consumers surveyed haven’t had a claim in the past 12 months, yet still harbor ill feelings toward insurers, Guidewire reported.
“The combination of people’s finances being squeezed and their opinions of insurers being low threatens to widen the insurance gap in ways that could make consumers far more open to harm,” René Schoenauer, director of EMEA product marketing for Guidewire, said in a release. “It appears that insurers are struggling to demonstrate the value that they deliver to customers, and this is being shown in notions of insurers as inconvenient or unwilling to pay claims.”
At the same time, 2 in 5 U.K. policyholders say they are very or somewhat comfortable with the idea of purchasing insurance directly from companies such as Tesla, IKEA and Amazon when making major purchases.
While they might be comfortable buying insurance from a tech-first company like Tesla, and many are seeking ways to save money, just about 12% of U.K. consumers have embraced usage-based insurance (UBI) programs. This is up from 9% in 2021.
“Since consumers appear comfortable with the idea of buying from a consumer brand, even at this nascent stage, insurers need to start planning now for what kind of role they will play in this ecosystem economy,” Schoenauer said. “Do insurers fight to preserve their brand and invest in becoming more customer-centric to do so? Or do they choose to invest in technology that allows them to seamlessly integrate with these consumer brands and expand their book of business that way? There are no right or wrong answers here, but it does require commitment to a clear strategy either way.”
Among U.K. policyholders in UBI programs, 37% said they went that route because it fits their lifestyle, while 33% enjoyed the flexibility. Another 30% said they selected a UBI policy because they no longer drive enough to warrant a traditional policy.
However, the number of policyholders that see value in UBI policies has declined from 60% this past year to 54% in 2022, according to Guidewire, which noted consumers in Germany, France and Spain are more likely to participate in a UBI program.
Although U.K. insureds seem to be on the fence regarding UBI, a majority say they are comfortable sharing data in exchange for services that can help them prevent damages. Guidewire reported that 21% are willing to share real-time data on home plumbing, while 20% are willing to divulge personal details on driving habits and 19% would do the same for home heating data.
Around 36% of consumers said they understand why an insurer would want this data, but would prefer it not be collected, while 28% feel it is an invasion of privacy.
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