The National Consumer Council (NCC) has warned insurance providers about how they use information they collect from their customers.
In a MORI qualitative study of 73 consumers, the biggest concern most had was that companies were sometimes asking unnecessary questions. NCC believes this could be dissuading some customers from purchasing essential services.
NCC director Anna Bradley said: "Our research suggests consumers are happy to provide personal information they see as relevant, but they are less comfortable when they are asked for details that appear unnecessary. In some cases, people opt out of transactions rather than provide such data."
A spokesman for the NCC added: "The key is to make it clear what the data is to be used for."
To promote consumer awareness, the council has proposed a set of guidelines on how companies should present the questions they ask to consumers.