Over a quarter of consumers in the UK are looking to save money by cutting back on their insurance policies following the credit crunch, causing the insurance industry to lose £1.5 billion, according to a survey by business analysts, Deloitte

The survey, which was carried out last month by YouGov on 2286 adults, established that 26 per cent of respondents plan to cut their spending on insurance policies over the next year.

The poll found that worried consumers are cutting back many of their policies to the minimum, with 18 per cent claiming they will downgrade to third party only car insurance.

Furthermore, the much talked about payment protection insurance policies are likely to be cancelled by 26 per cent of consumers looking to cut back.

PPI - which provide a form of income in the event of an illness or accident that causes someone to stop working and earning income - has been the result of bad press lately after a report revealed that 2 million customers have been sold potentially worthless PPI.

However, health insurance was the least likely to be downgraded as less than one in 10 of those surveyed are looking to better deals on their policies during the next 12 months.

Commenting on the findings, David Rush, insurance partner at Deloitte, said:" It is understandable that many consumers are looking to cut back on items but they should carefully consider about which types of insurance are needed in a downturn."