Insurers face £1 bln hit from slump

LONDON (Reuters) - Insurers could lose 1 billion pounds in premium income this year as recession-struck consumers let policies lapse or seek out cheaper deals, accountants Deloitte said on Saturday.

A Deloitte survey found that 17 percent of consumers are considering cutting back on their insurance spending next time their policies are up for renewal, against 75 percent who do not intend to make any cuts.

Spending on household and contents insurance is most likely to be affected this year, Deloitte said. In 2008, the biggest cutbacks were directed at payment protection insurance, pet insurance, and health insurance.

However, Deloitte said the proportion of consumers planning to make cuts is down from 26 percent last year.

"While consumers are still feeling the pressure of the recession, it is evident that the financial crisis has had a smaller impact on consumer spending on insurance than was anticipated 12 months ago," said James Rakow, an insurance associate partner at Deloitte.

"Once the recession is over, insurers might be wise to think about their tactics to regain the business lost, which could amount to as much as 1 billion pounds."

The survey, conducted by YouGov on behalf of Deloitte, was conducted between May 1 and May 5, and is based on a sample of 2,229 adults.

(Reporting by Myles Neligan; Editing by Mike Nesbit)