Fears that the current credit crunch will have a considerable affect on the car and van insurance industry, as mortgage borrowers and secured loan borrowers begin to feel the financial squeeze, may be borne out by recent statistics published on the Independent price comparison website MoneyExpert.com, which discovered that in the last 12 months around 350,000 car and van drivers took vehicles onto UK roads without any insurance cover whatsoever.
At the very minimum, the law demands that motorists must have third party insurance cover, in order to meet the costs of medical care and personal liability should they be involved in a serious accident.
MoneyExpert.com spokesman Sean Gardner insisted that cost could never be considered an adequate excuse for failing to take up an essential insurance policy.
He commented: “It’s a real worry that so many people persist in driving without insurance. They are putting the personal and financial security of others at risk.”
There are also indications that failing to secure an adequate insurance policy is not the only crime some motorists may be guilty of committing.
According to the Essex Echo newspaper, police in the county have recently noted that a series of registration number plate thefts could be attributed to criminals simply intending to avoid the payment of car insurance and road tax.
It is understandable that during the present financial climate even the most law-abiding members of the public may be driven to extremes, particularly those with secured property or secured loans, who may now be finding that the usual avenues of refinancing are becoming closed to them because of new strictures being imposed on lending criteria by secured loan, mortgage and remortgage companies.
It is perhaps surprising then, according to a report recently published by Chiltern Debt Management, that for the first time ever the average level of debt of a consumer on an informal debt management plan has dipped below the £26,000 mark.
The organisation’s Debt Monitor also revealed that the average of total debt has decreased by around £400 since the start of the new year. This, the analysts claim, is proof that consumers are managing indebtedness much better by preventing debts from escalating, as had previously been the trend.
Acknowledging that credit is becoming much more difficult to secure during the current financial climate, with tighter limits being applied to credit cards – it is estimated that in the region of 60% of Britain’s £25billion of problem debt is on cards — and very much reduced mortgage options available, a spokesman for Chiltern, Nathan Gladwell, commented that the present crisis was inducing those who were having difficulty with their finances to seek out other options.
He went on: “Add to that the rise in food, fuel and energy costs and it’s not surprising that people are feeling the pinch in their pockets. Those who are struggling financially have to readjust their spending to more realistic levels and consider other options, such as informal arrangements.”
This increasing movement towards debt management as a means of solving long-term financial difficulties was further reinforced by the TDX Group, which provides detailed debt collection information to banks.
Speaking very recently, Mark Onyett, chief executive of TDX, said that 2008 was likely to be a boom year for Individual Voluntary Arrangements (IVAs).
He commented that as the number of problem debts increased, up to 600,000 people could be forced into bankruptcy or in to taking up an IVA.
“For the vast majority of people this year,” he went on to say, “refinancing and remortgaging won’t be available as a solution. The choice will be narrowed down to bankruptcy, a debt-management plan or an IVA. There could therefore be a doubling of the number of IVAs.”