Thirty-five percent of low income households on the £10,000 a year or less threshold have no insurance but are the most likely to suffer from crime, fire and flooding; according to the latest report from the Association of British Insurers (ABI).
Published today, the ABI report entitled: ‘Access for All: extending the reach of insurance,’ has laid out plans to broaden its policies in order to permit low income families to access much needed cover, should the worst happen.
ABI’s report has revealed that less than half (44%) of people in the poorest households purchase home contents insurance, compared with 82% of those with average incomes of between £15,000 and £30,000. And while only a third has motor vehicle insurance, three quarters have never purchased life insurance.
To make matters worse, many of the people on low incomes that become the victims of crime, fire or flooding will turn to loans or other forms of borrowing in order to replace stolen or damaged household goods, further increasing their debt.
Unsurprisingly, the ABI report also shows that households with an income below £5,000 were 71% more likely to be burgled at least once compared with households with incomes of £30,000 or more. In addition, arson rates are at least 30 times more likely in poorer areas, as is the risk of flooding, further increasing the vulnerability of those on low incomes.
Speaking at a seminar on financial inclusion and insurance at the ABI today, Director General, Stephen Haddrill, said: "Insurance provides valuable protection to people on all income levels. The poor are least able to deal with financial loss and depend most on insurance. We need to address the issue of low take-up in low-income groups. A lack of spare cash is the biggest factor holding back the purchase of insurance by lower income households.
“The ABI will be addressing this issue through our financial inclusion action plan. In early 2008 we will launch a new campaign, with a special emphasis on insurance with rent schemes, improved financial education and easier access to insurance for customers with particular needs."
Learn more about life insurance
© Fair Investment Company Ltd