Pessimism cause consumers to turn their back on payment protection insurance
Pessimism surrounding the UK’s economy and the tightening of household budgets is causing consumers to avoid buying payment protection insurance in order to cover their outgoings.
An increase in the cost of living has led to 70 per cent of Brits to say they are not willing to take out payment protection insurance (PPI) in order to pay their mortgage, insurance premiums and other outgoings, according to research from the Association of British Insurers.
More than 90 per cent of Brits believe the UK’s economy is in a worse position than the same time last year, with a further 80 per cent expecting economic conditions to worsen in the coming year. The public’s pessimism is reflected by companies, who are cutting costs, resulting in a rise in unemployment.
Despite this pessimism, and the acceptance by two thirds of people that they would not do well if made redundant, Brits refuse to seek financial support through purchase protection insurance.
Nick Kirwan, the ABI’s assistant director of health and protection insurance said:
“It is worrying that so many people are not prepared to look at taking out protection insurance, even insurance which covers redundancy given the uncertain economic outlook. It’s clear that we need to work harder to get the message across about the peace of mind and value that having the right protection insurance gives individuals and families. We recently published a consumer factsheet on protection insurance products. We hope this will encourage more people to consider protecting their most important financial assets - their income and their home.”
50 per cent of survey respondents had life insurance, while 39 per cent has no life insurance, payment protection insurance nor mortgage payment protection insurance (MPPI).
Rebecca Driver, the ABI’s director of research and chief economist said that “Given the economic outlook and the risk of rising unemployment, people need to develop strategies to protect themselves better.”
According to City Analyst Capital Economics thousands of the employed middles classes are taking on second jobs to deal with the rising cost of living. These workers include lawyers, police officers, business analysts, and IT workers taking on freelance work, selling things on eBay or working as chauffeurs. Compared to previous periods where the cost of mortgage insurance and living as a whole has risen there has been a five per cent rise in the number of people working second jobs bringing the current total to 1.15million.