The Syndicate’s report on consumer perceptions of protection also showed that while a third of respondents had continued to save during the economic downturn the average contingency fund of £2040 was expected to service unforeseen events as well as pleasurable ones.
The Syndicate is a research partnership between the Protection Review and Hannover Life Re (UK) focusing on innovation and consumer research. Peter Le Beau, co-chairman of Protection Review, said: “It is not news that the economic crisis is impacting significantly on the way consumers feel about their finances. Sadly they are not prioritising protection despite its relevance in many situations.”
Out of the 3000 adults who took part in the survey, 77% viewed their savings as means of funding fun however 70% said their savings were also their provision for financial security.
These figures correlate with the latest research from Protection Review which found 69% of people would rely on savings if they were off work for a long period of time.
In its report The Syndicate said savings were undoubtedly seen as almost a guaranteed way to provide security but this degree of faith in the value of a concept was currently denied to protection insurers.
And with over half of the sample group choosing to cut back on savings people are placing themselves in a precarious and unsustainable position.
Participants were subsequently asked if they agreed that taking out an insurance policy would achieve financial security; with 28% agreeing and 60% disagreeing.
Cynicism increased with age as 75% of 55-64 year olds disagreed with the statement while 42% of 18-24 year olds agreed that insurance would provide them with security.
The Syndicate concluded that insurance was seen by many as simply a cost and not a certainty of protection which was, in part, due to the industry’s failure to emphasise and communicate the role of protection in financial security.
Ronnie Bowes, head of marketing at Hannover Re UK Life Branch, said: “We need to look at new ways to communicate the greater reward protection products offer to encourage people to look longer term to receive the valuable benefits they provide not today, but tomorrow.”