Low-income households have no insurance

A report published by the Association of British Insurers (ABI): Access for All: extending the reach of insurance, has established that 35% of people in the lowest-income households (less than £10,000 per year) have no insurance at all.

ABI plans to assist these individuals as they need insurance most as they face higher risks from crime, fire and flooding. When people with low incomes and no insurance have to replace stolen or damaged household goods, approximately 33% of them borrow money, increasing their existing debts.

Stephen Haddrill, Director General of the ABI, commented that insurance provides worthwhile protection to people on all salary levels. Those worse-off are sometimes unable to deal with financial loss and rely most on insurance.

Mr Haddrill added that the ABI will be tackling this issue through their financial inclusion action plan. The ABI plans to introduce a new campaign early next year with a special emphasis on insurance with rent schemes, improved financial education and easier access to insurance for customers with specific requirements.

ABI discovered that 44% of people in the poorest households buy home contents insurance, compared with nearly twice as many (82%) in those with average incomes (£15,000-£30,000). About 33% purchased car insurance and just 25% had purchased life insurance.

The ABI report also noted that poorer households face greater risks than their wealthier neighbours. The findings show that households with an income below £5,000 were 71% more likely to be burgled at least once compared with those with incomes of over £30,000.

In the more disadvantaged areas, arson rates are up to 30 times higher and people with the lowest incomes are much more exposed to flooding.

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