Kiwis are shying away from insurance companies in order to free up their money. Photo / Glenn Jeffrey
As the credit crunch bites, struggling families are cutting their insurance cover to free up money - a dangerous move according to insurance companies.
Major insurers have told the Herald on Sunday more customers are questioning the cost of insurance and others are opting out altogether.
Some are
even dabbling in insurance fraud in a desperate attempt to get cash.
Ian Foy, chief executive of IAG - which incorporates State and NZI insurance - said the group already had customers querying their policies and cutting back.
"There's no doubt the customers have noticed the economy. We are finding people are talking about price a lot more than they used to."
Foy said customers were feeling the pinch with food, petrol and bills going up. "They're just saying they are struggling to juggle."
Foy said others were not renewing their insurance policies.
However, he said that put people at greater risk given the global financial market. "The one thing you don't want to do when money is a little bit tight is have a major loss when you are not insured for it."
Owen Stokes, a risk and finance specialist insurer for NZF Group, said some people were already cutting back on cover, with health and medical insurance often first to go.
He believed the situation would worsen in the next few months. "People sit down and say `what can I save money on?' People usually say it's their health insurance."
Other insurers said they had noticed an increase in customers defaulting on premium payments.
In Wellington, insurance broker Peter Chote said his firm was seeing a rise in insurance cancellations, and people trying to restructure. "The questions that we are getting from clients now are different from what they were 12 months ago."
Alan Perry, executive manager of customer support at AMI, believed the increase in numbers of defaulters was the result of people trying to cope with less in the bank.
