There are over 20 million people in financially vulnerable circumstances in the UK. 26% of these people do not hold a single insurance product, meaning they lack protection to withstand unexpected life events, such as illness or vehicle breakdown.
Our segmentation model suggests that this protection gap is getting bigger with nearly half (49%) of those in excluded groups reporting the rising cost of living is affecting their ability to afford insurance products, and 10% saying it has prevented them from taking out a policy altogether.
During the Insurance Panel at the Delivering Financial Inclusion Together Conference on the 4th November, we explored this further, hearing from people with lived experience of exclusion from the insurance market. The aim was to try to understand their circumstances, the implications of a poor claims process or a lack of affordable protection options and how the stories behind the stats can inform industry action to close the protection gap.
We saw video extracts from interviews with Jane and Sarah about their claims experience how delays and intrusive questioning during the process exacerbated harm and left them feeling unsupported and reducing trust in the insurers.
We heard from Gordon about how a lack of affordable product options had left him and his family under protected when he got ill and from Anne who, on receiving a terminal diagnosis saw her insurance bills rise and feeling trapped during an already stressful time.
And Ismail, who explained how his learning disability made it difficult to understand and make good choices about what insurance and protection he should have and how it made him nervous about switching providers.
Our panel of experts discussed each of these cases and what could be done to design in solutions to help people and particularly those in vulnerable circumstances to better understand the options available to them and the features and benefits of the product they were buying.
Crucially, the discussion also looked to the future and how new technologies and inclusive and accessible design practices could help insurers to better understand the needs of excluded consumers to make available more affordable products and services that could be understood and accessed more easily by consumers who don’t have any appropriate options today.
The discussion covered positive moves by the sector to better identify and support existing customers with vulnerabilities and the mandate for change provided by the Financial Inclusion Strategy.
Whilst the strategy does not have actions covering all insurance products, Fair4All Finance are very pleased that our initiative to increase the uptake of home contents insurance amongst tenants of social housing and research into the income protection needs of people on precarious incomes are included and we are looking forward to working with the insurance sector, the FCA and other stakeholders on these and other initiatives in 2026.
For more info or to get involved in the home contents insurance for social renters pilot please contact Ella on ella.reid-norris@fair4allfinance.org.uk
For more info on income protection for people on precarious incomes please contact Jake on jake@fair4allfinance.org.uk
