The financial services industry has a ‘vital role to play in supporting people during these challenges times’, says regulator 

Some 3.6m insureds cancelled at least one of their policies in the six months leading to January 2023 because of financial pressures driven by cost of living pressures.

That was according to the FCA, which also highlighted that 3.1m policyholders also reduced the level of cover on at least one of their policies during that timeframe.

The regulator revealed the figures in its Financial Lives January 2023: Consumer experience of the rising cost of living – the burden of bills and ways to get support research, which was published earlier this week (17 May 2023).

“The help people need to deal with the rising cost of living goes beyond financial services, but the industry has a vital role to play in supporting people during these challenging times”, the FCA stated.

“We have set clear standards and expectations for how consumer credit, mortgage and insurance firms should help customers in financial difficulty and we are taking assertive regulatory action where firms fail to meet them.”

Cover drops

The FCA also highlighted policies cancelled by the highest proportions of May 2022 policyholders.

Of 19,145 survey respondents, policyholders that chose to cancel extended warranty insurance sat at 5%, while 3.8% cut stand-alone home contents insurance.

Some 3.8% cut pet insurance, while gadget insurance and mobile phone insurance were cancelled by 3.1% and 2.5% respectively.

No more than 1.5% of May 2022 policyholders cancelled any other type of policy, the FCA added.

The regulator also revealed stories from people who had to scrap their insurance policies. 

One man said in the research that he ”had to cancel insurances and social outings to make ends meet, to prevent going into debt, along with eating a lot less to make meals go further.”

A woman added: “I had to take my son off the motor insurance – this means that he doesn’t have the chance to drive our car when he is here with us during the holidays.”

The FCA will publish its full Financial Lives 2022 survey report later this year – it will include “full results and more detailed analysis” from its recontact survey completed in January 2023.