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As times become a little bit harder and we are forced to tighten our purse strings due to the current credit crunch, and huge financial organizations such as the Royal Bank Of Scotland who owns Direct Line, Churchill Insurance, Green Flag and many more brand insurance names, announcing losses we sit and wait to see how these insurance companies in general will react to the credit crunch, will they increase insurance premiums or not? There are two things to consider, do they reduce their premiums in the hope to get more customers and be more competitive, or do they increase their premiums in the hope of recouping any losses.
Lets break the options down

Car Insurance
As this is a legal requirement you would think it would be unlikely that this market will be affected much, presuming an insurance company makes as much profit on a small cars premium that a larger engined one, taking into consideration he risk factor. However, there is a risk that this will become the only guaranteed insurance purchase a normal family will make.

Home Insurance
This is where those families that are feeling the pinch may just delay paying their renewal home insurance premium, until funds are available or maybe choose not to renew at all. This is the first level of reduced sales that the insurance organizations will need to recoup their profits. Of course not having home content insurance can be very dangerous, financially if you were to surfer a fire or theft. Buildings insurance however, may stay constant, as it is a normal requirement of having a mortgage, so there is a likelihood of buildings insurance premiums increasing.

Life Insurance
If you already have an ongoing policy it is unlikely that many would stop paying into it, as you could risk losing the money you have already paid? Depending on the type of agreement you have of course. But those who were looking to start a life insurance policy may now have second thoughts, so you could predict a downturn in life insurance sales through 2008. It is likely that insurance organisation may increase premiums either to existing policies or new polices to cover extra costs

Breakdown Insurance
Normally seen as a non essential policy, but thousands of motorists every year get caught out, with their vehicle breaking down and then being faced with a huge garage bill. There have been some remarkable prices for basic roadside polices this year. Green Flag which is owned by RBS, have policies as low as 25 GBP's, the price has now gone up a little higher, but still cheaper than previous years, this seems to be mirrored by other breakdown cover companies also. This may be an insurance policy where bargains can be made. Insurance companies who provide the service, know this is not seen, as an essential policy to many motorists, so it is likely prices will remain competitive throughout the credit crunch to get your name on that agreement.

Of course the above is all just a guessing game and no one really knows how the credit crunch will affect everything we do this year and next year. But it is important to understand that premiums could change in the future and to also remember why have the right insurance policy could protect you and your family and taking a risk not to have any insurance or a policy not suitable to your needs, could have a very high cost, credit crunch or not.

Mark is webmaster for Green Flag and Financebam.