The missing piece of the jigsaw: report finds 16 million people without contents insurance

The Financial Inclusion Commission (“FIC”), a cross-party campaigning body of Members of Parliament, Peers, social-policy leaders and industry experts, today releases the findings of its report Access to Insurance, which highlights the gaps in insurance coverage in the UK and sets out a blueprint for widened industry access.

The report outlines the extent of those without adequate insurance cover, including that:

Almost 16 million people (35%) are without contents insurance

60% of those earning £15,000 or less per annum have no contents cover

Few of these people would be able to replace their belongings with savings

Insurance is the forgotten piece of the financial inclusion debate; it gives people the peace of mind to plan financially beyond day-to-day expenditure. Our analysis shows that a significant proportion of the UK population is without contents insurance, which arises from a lack of demand from individuals and problems with supply.

Being young, having a low income or living in a rented property are all factors for not having home insurance. Moreover, those in social housing tend to be found in areas of higher crime, and renters themselves are less able to afford the annual premiums. A study by the FCA reports that 81% of ‘generation rent’ are without contents cover.

Those in vulnerable circumstances are also likely to lose out: older people, for example, tend not to have the knowhow to handle the industry-wide move online, and younger people struggle with financial capability: 19% of adults find information provided by insurers difficult to understand.

For many, contents insurance is made unaffordable because their financial situation prevents them paying often cheaper annual premiums and from purchasing comprehensive cover. To square the circle of contents insurance inclusion, the report suggests four steps forward:

  • Increasing access to contents insurance coverage for both social tenants and private tenants
  • Providing better access to household insurance for other groups who are not well served by the mainstream market
  • Increasing the profile and understanding of household insurance as part of a wider financial inclusion agenda
  • A collaborative approach with Government, regulators, insurers and others, with the former to take overall responsibility through a national strategy

Commenting on the research, Sir Sherard Cowper-Coles, Chair of the FIC, said: “The findings in this report are a reminder of the challenge we face in furthering financial inclusion. For many, insurance is an unaffordable or unobtainable safety net. Government must push for a strategy that widens access to quality cover, so that everyone has immediate access to a capital buffer in case of loss.”

I have to say that I find this something of a puzzle as quality contents insurance can be purchased in most areas for less than £1 a week. In inner cities, maybe £2 a week. It would be interesting to find out how many of the people who “can’t afford insurance” can afford Sky TV, Playstation, foreign travel and the like. It seems to be a matter of where priorities lie.