Good Shepherd Microfinance, in partnership with the National Australia Bank (NAB), is investigating opportunities to increase the access, uptake and understanding of insurance for low-income Australians.
To start the conversation, it has released a discussion paper Insurance for low income Australians: Taking innovative action which explores issues and potential barriers to offering a targeted product at some of Australia’s most vulnerable people.
According to Dominic Collins, Innovation Manager at Good Shepherd Microfinance, costs, distribution, regulation, affordability and demand are just some examples of issues and current barriers.
“What is vital, however, is to find someway of protecting those who are least able to absorb or recover from unexpected losses. Insurance is an essential element of being economically included, providing benefits far beyond restoring a policyholder to their former position should they suffer a loss.”
Mr Collins says that for the insurance industry, microinsurance is largely a new or poorly understood market.
“It does however provide an opportunity to reach many potential clients, improve industry standing, promote a valuable product and address current financial exclusion concerns.”
“We know many people have an interest in the product and believe insurance is a vital part of a suite of community finance products, and vital to achieving a financially inclusive Australia.”
For the individual, insurance provides peace of mind and reduces stress, knowing that assets can be accumulated and protected, or a motor vehicle used confidently.
For the community sector, insurance can reduce the relief and welfare burden, help build community resilience, promote greater financial understanding and enhance community finance programs.
“Governments also benefit from improved resilience, especially after disasters, a reduced welfare and relief burden, and the greater economic inclusion,” says Mr Collins.
The intention is to act on feedback from the discussion paper, hold roundtable discussions and begin to move towards introducing a pilot program in late 2013.
Read our Microinsurance Discussion Paper: Insurance for low income Australians: Taking innovative action. Feedback is required by Friday 19 April.