Jake Attfield, our Senior Programme Manager, Strategy, shares an update on our work with the insurance sector.
According to our latest segmentation analysis, 49% of those in financially vulnerable circumstances, that’s 8.6m people, say that the cost of living crisis affects their ability to afford insurance.
Having the right insurance and protection products makes people more financially resilient. It also gives them confidence and peace of mind that they can withstand financial shocks and deal with unexpected life events. Improving Financial Inclusion in Insurance is an important priority for us at Fair4All finance and it has been a busy few weeks for our programme.
Firstly, it was great to see and support the launch of Fair By Design and SMF research on addressing the poverty premium in the insurance industry which includes key recommendations which, if enacted, really can shift the dial in making insurance products fairer for people on low incomes and ensure that no-one is negatively impacted by where they live or how they chose to pay for their insurance.
In early March we also held the latest meeting of the Financial Inclusion Action Group with stakeholders from across the insurance sector. The group is made up of representatives from the major insurers, brokers, price comparison sites and other insurance stakeholders who share the same mission to increase the financial resilience and wellbeing of people in vulnerable circumstances through improving the availability of fair and accessible insurance products and services specifically home, motor and income protection products.
The group’s core beliefs are:
- The Insurance sector can and should serve people in vulnerable circumstances
- Market Solutions should work hand in hand with government and the regulator to ensure that everyone should be able to access the right cover and protection, when they need it, at a fair price
- Financial inclusion is the responsibility of the whole sector and by collaborating and working with other stakeholders we can improve the financial wellbeing of people across the UK
In that meeting we talked about how our segmentation model could be used to take actionable steps to improve consumer outcomes and where we should focus and prioritise to make the most impact, quickly. As ever, it was a really great discussion and it is wonderful to see such passion for this topic and to discuss new ideas and innovation with people who can enact and take ownership of the changes that are required.
We also work closely with the Association of British Insurers (ABI) and at it was great to see such a keen focus on financial inclusion and consumer needs at their annual conference on 21 February.
The conference saw the launch of two important initiatives; firstly, the ABIs’ new DEI Blueprint which provides a framework and support to members to build a more diverse and inclusive sector by creating the right culture and attracting and retaining the right talent.
This can only benefit consumers and is an excellent enabler to the second initiative, which is the ABI’s new three year strategy which aims to build better trust with customers, lead on investment in people and the planet and to create an effective market. Each of these three strategic pillars supports greater financial inclusion.
We followed up on these topics at the latest ABI Consumer Advisory Group – which is made up of consumer champions and organisations that hope to influence the ABI (and their members) to improve their consumer focus and respond to the needs of vulnerable people and those on low incomes.
At the latest session, I led a discussion on our segmentation of people in financial vulnerable circumstances and what the industry should prioritise to have the biggest impact for those currently underserved or paying too much for their cover.
One area we spent a bit of time on was the channels that are open to people on low incomes. Price comparison sites do not always have the sort of targeted products that are appropriate for the financially vulnerable and there is definitely space to look into how we increase access options and use trusted intermediaries to present the available insurance options to people who need them.
With this in mind, we have been working with a potential partner on some new research in this area. Too soon to announce it now but watch this space!
Before you go, my colleague Fionn Sharpe, Policy Manager at Fair4All Finance recently responded to the FCA’s consultation on guidance for insurance firms – you can read Fair4All Finance’s response here.