Most people recognise that insurance is vital for protecting belongings and for building individual and family resilience. Meanwhile many people on low-incomes do not purchase insurance due to high costs, distrust, or insurance falling to a low priority after paying for other essentials. As one in six adults in Australia live below the poverty line, many go without insurance.
Good Shepherd Microfinance, a national community focused organisation, released today Covering the essentials, a report that calls for a review of the lack of access and affordability of insurance.
The report, produced with the support of the National Australia Bank (NAB), calls for governments, the insurance industry and the community sector to work together in order to help those most vulnerable protect assets they would struggle to replace.
As priorities, the report focuses on increasing access for home contents and motor vehicle insurance, but expresses concerns about funeral insurance, a product that is often criticised as being overly expensive with little value.
Good Shepherd Microfinance will draw from knowledge contained in this report and intends to introduce products to the market in the next year.
“While Good Shepherd Microfinance enables people to obtain household goods through our financial programs, we know many of these goods go uninsured. This leaves our clients exposed to loss they may not be able to absorb or recover from. We are committed to finding innovative ways for our clients to have financial peace of mind and that means their important assets are protected”, said CEO Adam Mooney.
A recent report by the Centre for Social Impact shows 17.7 per cent of the Australian population is fully or partially excluded from financial services, including insurance, placing the vulnerable in a precarious position. Other reports suggest over 20 per cent of the population do not have home contents insurance.
According to the report’s author, Dominic Collins, insurance is essential in improving economic wellbeing. “Through research we know people want insurance, but without access to appropriate and affordable insurance it is impossible to give a meaningful consideration to asset protection”.
“Not all insurance products will be appropriate for all people, but higher insurance uptake has benefits for many stakeholders as it increases resilience, protects assets, reduces the burden on welfare and relief agencies.” said Mr Collins.
Good Shepherd Microfinance began investigating opportunities for increasing access to affordable, appropriate insurance for people on low incomes in December 2012, and acknowledges NAB for their contribution to this work.
“Our 10-year partnership with NAB has been very successful in assisting Australians living on low incomes, and their contribution to addressing non-insurance is appreciated. We look forward to collaborating with community, government and industry to develop sustainable, easily accessed insurance products”, Mr Mooney said.
Essentials for these products include fortnightly payments, easy access, and product simplicity. The report is available on www.goodshepherdmicrofinance.org.au/loans/insurance