Struggling with insurance premiums, struggling to find help

As COVID-19 looms large over 2021, new Which? research reveals the numbers of insurance customers struggling with their premiums.

A new survey of thousands of insurance policyholders shows that one in seven (14%) car and home insurance customers have had difficulties paying their premiums during the pandemic.

Three in ten (29%) private health insurance (PMI) customers have also struggled, found the November 2020 Which? survey of 2,386 members of the public that owned either car, home or private health insurance.

Here we explain what help is available for those struggling with their finances, and why too many people are falling through the cracks

How has the pandemic affected insurance?

COVID-19 has been hugely disruptive to our lives and, in some cases, finances.

But for insurers, the reduction in driving during the annual lockdowns has come with some benefits:

While those struggling with their finances can cut back on luxuries, insurance is not easily dispensed with - car insurance is a legal necessity if you're driving, and home insurance is typically a precondition of taking out a mortgage.

Private health insurance, while less of an everyday necessity, for older customers is notoriously difficult to replace with equivalent cover if cancelled.

The Association of British Insurers (ABI) has pointed out that, while car insurance claims fell by a quarter in first three quarters of 2020, the average claim value actually rose by 27%.

The ABI's car insurance premium tracker has found the cost of car insurance is at a four-year low.

• Find out more: coronavirus news and advice from Which?

Falling through the cracks

Prompted by the Financial Conduct Authority (FCA), most insurers have been offering some form of assistance to customers in financial distress.

Despite this, while our survey found most struggling customers had received support, significant numbers appeared to have fallen through the cracks.

Up to a quarter (25%) of struggling car insurance customers said they'd received no help at all from their insurer - in some cases potentially because the message didn't reach them that it was on offer.

Meanwhile, 21% of struggling home insurance customers reported they'd gone unassisted, and 20% of those with private health insurance.

• Find out more: coronavirus payment holidays explained

What help is available?

In November, we contacted 15 insurers, most of which confirmed they were proactively letting customers know about available support.

This support included:

• flexible payment options
• premium reductions
• advice on how to reduce premiums by reviewing cover.

Some car and health insurers have also reduced their premiums for new and renewing customers because they'd been paying out less in claims during the pandemic.

Admiral has meanwhile rebated all of its customers £25 each, and five health insurers we contacted (Aviva, Axa, Bupa, the Exeter and the WPA), have all made commitments to pay back to their customers any 'profit' made because of reduced private healthcare services.

More engagement needed

When it comes to difficulties affording premiums, Which? is concerned that information about available support hasn't been reaching all who need to hear it.

When we asked struggling car insurance customers whether their insurer had made them aware of information about help with premiums, such as payment holidays, 31% said it hadn't.

Harry Rose, editor of Which? magazine, said: 'While insurers could not have predicted the unprecedented impact of coronavirus, customers will not appreciate it if they feel firms are benefitting at their expense - or if they are being left without support at a time of need.

'The FCA rightly proposed guidance for firms to support customers struggling due to coronavirus, but it's very concerning that the regulator is no longer requiring insurers to proactively contact those who miss a payment.

'Customers missing payments are likely to be vulnerable, and firms should be doing everything they can to engage with and support those who need it most.'

What to do if you're struggling

Defaulting on an insurance payment doesn't just jeopardise your cover. It'll also be reflected in your credit file, potentially affecting your ability to borrow and to get insurance in the future. Act now to avoid this happening.

Tell your insurer early on

If you're having trouble continuing to pay for your insurance, the earlier you let your insurer know you're in difficulty the more likely they are to be able to be to provide timely and practical help. This can include changing when payments are due, temporarily reducing your premium, or reviewing the cover you have.

Review your cover

Life has changed, and your insurance should reflect this. For instance, while you're sitting at home, not commuting, you might be paying for car insurance that's priced with the assumption that you drive at peak time every day. Some insurers have waived adjustment and cancellation fees to make it easier for their customers to make changes and bring down their premium.

Shop around

With car insurance premiums at a four year low, now could be an especially good time to start shopping around if you don't do so regularly. Switching insurer can also save home insurance customers a significant amount of money.

• Find out more: see our guide on getting cheap car insurance