Economic anxiety prompts insurance cutbacks among consumers
As uncertainty continues to swirl around the national economy, consumer confidence in their personal finances has extended its decline. According to a new Nationwide Agency Forward survey, consumer sentiment on the economy and their personal finances has deteriorated since September 2022, with only 16% of consumers positively rating the overall U.S. economic condition, an 8% decrease from last year. Additionally, only 39% give a positive rating of their own personal finances, also 8% lower than last year.
Looking for ways to cut cost
In efforts to save money and manage the impact of inflation, 57% of consumers admit using their savings in the past year for everyday expenses like gas, groceries and housing expenses. Others reported eating out less often (54%), driving less (37%), and delaying major purchases (32%) within the last twelve months.
Eliminating insurance for potential savings
Among the top financial concerns for consumers is the cost of insurance, with 17% rating it among their top financial worries. 51% of consumers said they are looking for ways to save money on their existing insurance policies.
- 26% are decreasing or plan to decrease coverage/limits on existing policies
- 23% have or are considering switching to a new insurance agent
- 20% have already removed a policy from their coverage or plan to in the next six months
“Insurance is a layer of security that policyholders can rely on, especially as consumer prices have risen in the face of inflation. It provides the peace of mind knowing that you’re covered if you encounter a significant claim while your personal budget is stretched thin,” says Beth Riczko, Nationwide’s President of P&C Personal Lines. “My advice, if you are looking at insurance as a way to save, talk to an agent. Make sure you understand the implications of policy changes and how that would impact your current finances.”
Risking detrimental impacts by cutting back insurance
Some consumers may be taking unnecessary risks by cutting back on insurance coverage. Instead, consumers should explore ways to save money without compromising their coverage, says Riczko. For instance, reducing coverage or limits may result in more significant out-of-pocket expenses in case of an accident or unexpected loss. Additionally, removing a policy entirely could leave a person vulnerable to financial ruin if a significant event occurs.
The strength of an insurance carrier really matters now
Despite these actions, consumers are also looking for strength, flexibility, and reliability from their carrier during this period of economic uncertainty. As a result, 71% of consumers have reviewed their current insurance policy or plan to in the next six months.
“Agents should be engaging with clients to provide counsel to help navigate this challenging economic climate,” said Riczko. “Carriers and agents must be responsible counselors in helping identify possible discounts and the right policy mix to deliver some peace of mind for clients in these times of uncertainty.”
Nationwide partnered with Edelman Data & Intelligence to conduct a 15-minute online survey among a sample of 2,000 nationally representative adult consumers between March 30 and April 13, 2023. As a member in good standing with The Insights Association as well as ESOMAR Edelman Data and Intelligence conducts all research in accordance with local, national and international laws as well as in line with all Market Research Standards and Guidelines.