PERSONAL FINANCE NEWS

HOME INSURANCE COMPETITION HOTS UP
Independent research firm Defaqto has released a report suggesting that the home insurance sector could be in for a rough ride over the next few years, with hot competitionplaying a role. The number of providers has reportedly grown 73 per cent since 2004, driven in part by websites that let consumers easily compare difference schemes and weight their benefits. A result of the change is that providers are producing more customised policies to try and draw customers from rivals, but Defaqto says that we could also see a growing trend of cut-throat price drops as the providers get ruthless with one another. Defaqto analyst Mike Powell says: “We believe there are long-term implications for insurers, who may need to consider how they restrict premiums while simultaneously lowering the cost of acquiring and retaining new customers. In addition, there are increasing signs that a race to the bottom with regards to premiums could emerge – and this could be detrimental to consumers and the industry as a whole.”

BRITS NOT MAXIMISING USE OF ISAS
Halifax has released research showing that the average balance for a cash Individual Savings Account (ISA) is £7,782, a third of average UK annual earnings of £26,075. The region with the highest average ISA balance is the Derbyshire Dales at £10,476.

Otherwise, more than half of the local authorities with the highest average ISA savings are located in the south, although greater London as a whole averages only a little above the national average, at £7,956. Those with ISA?savings equal to the highest proportion of their average annual income are the Welsh and Northern Irish, at 37 per cent and 36 per cent respectively. Unsurprisingly, over-75-year-olds have the highest average balance at £13,912 while savers aged 16-24 average £1,848 in their ISA. Halifax economist Nitesh Patel says: “Whilst ISAs have been available for over a decade, savers are still not making the most of their savings by using their full annual ISA allowance. The UK average of just £7,782 is only 1.5 times the annual limit.” The upper limit on national inflows into a cash ISA is £5,000.

NEARLY 1M STUDENTS APPLYING FOR AID
The number of live applications for financial support to pay university fees for the academic year 2010-2011 currently stands at 967,000, according to the Department for Business, Innovation & Skills. The number of applications in the system for maintenance loans and grants (to pay for living costs while at university) for this academic year has reached 826,000, with 32,000 having received their first payment. Meanwhile, there are 18,000 live applications for the disabled students’ allowance. The applications are processed by Student Finance England.