25% of people in the UK have no arrangements for contents Insurance cover and most do not have any savings to replace fire damaged items or flooded elements of their home.
A high proportion of these were people who rent, especially those in council homes or housing association properties. In fact it was found that none of those surveyed who had an income of less than 15k per annum could afford any type of cover at all.
There are a number of solutions available but an Insurance Claims Management company based in Essex suggested that the cover should be part of the monthly rental payment which would ensure landlords were able to cover their tenants. However a member of the Loss Assessors suggested the Insurance industry has tried this before and there was a poor subscription to this. Take-up of these kinds of schemes when trialled in the past.
The ABI (Association of British Insurers) found that only 30% of those in social housing had enough in savings to replace a menial item such as a fridge. It’s no surprise that properties in areas owned by the poorer elements of society were also at greater risk of theft, fire and escapes of water than the average household of a higher income bracket. The cause of their failure to insure is clearly that they cannot afford insurance cover and simply do not trust the Insurance Companies who are renowned for repudiating claims on budget policies.
Options included automatically signing up social tenants for contents insurance, but giving them the chance to opt out. Other recommendations included projects to improve understanding of the insurance sector.
Sir Sherard Cowper-Coles states
“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.”
The Association of British Insurers reckons that their members offer affordable policies to the majority but take-up remains poor. The main issue preventing people taking out policies is the squeeze on people’s income due to inflation, with disposable household income falling year after year.
Perhaps the selling of policies to low-income households is not profitable to insurers. Only a change in legislation will make it mandatory. The better off it seems will be better off and those on low incomes will be punished. Maybe there a kind of social fund for low-income households facing emergencies whereby it will underwrite situations where those with little end up losing everything and are unable to play catch up.