Insurance Times asks industry experts how the insurance sector can better support low income families who often see insurance as a luxury

Graeme Trudgill, executive director, Biba

Graeme Trudgill

Graeme Trudgill

The engagement of residential social landlords with tenants’ contents insurance schemes continues to be a concern. These products are able to provide vulnerable customers access to a valuable financial inclusion product and our aim is to continue to drive up the penetration of schemes to cover as many tenants as possible.

However, over the last 12 months, we have increasingly seen tenants’ contents insurance schemes removed by landlords, often with no alternatives provided. This is leaving those most vulnerable with no fallback option should the worst happen to their home and belongings.

As a mechanism for protecting the most vulnerable people in communities, these schemes cannot work without local buy-in.

Without councils, local housing authorities and local MPs taking an interest in resolving this protection gap, most low income earners will remain in their current position of vulnerability.

Our members have some fantastic products at very attractive terms and we will continue to work to improve financial inclusion.

Beatriz Benito, lead insurance analyst, GlobalData

Beatriz Benito, lead analyst, Global Data

Beatriz Benito 

Brokers will have to become more adept at tailoring policies and closing insurance gaps as demographic shifts make it harder to reach and engage with young adults. This group can no longer rely to the same extent as before on property purchases as a trigger to buy a home insurance policy.

According to GlobalData’s 2021 UK Insurance Consumer Survey, published in November 2021, 48.4% of renters have some form of home insurance, compared to 88.2% of homeowners. Escalating house prices have led to the ‘Generation Rent’ phenomenon, where many young adults have been priced out of the property market and are being forced to continue renting.

The conundrum is that renters will typically have less disposable income and will avoid any costs they deem unnecessary. But this challenge is also an opportunity, so brokers must put greater effort into explaining the value of having cover in place.

Brokers will need to provide more customised policies, to ensure that both the level of cover and premium are right for the customer. People will be unsure how long they will continue to rent for, so policies must be flexible and straightforward to manage.

Rising inflation, increasing energy, fuel and food bills, as well as taxes will push a greater proportion of individuals into financial hardship. This means that it is now more important than ever for brokers to find the right balance of cover and premiums for customers.

Martin Williams, chief operating officer, ThingCo

MartinWilliams, ThingCo

Martin Williams

From a motor insurance perspective, telematics insurance emerged almost a decade ago to support young drivers and help make premiums more affordable.

As lower cost technology has emerged, using artificial intelligence (AI) and voice recognition to do more for the customer, and operational costs have reduced, telematics is becoming far more viable for brokers to offer to other segments of the market, such as older drivers and those that want a miles-based product.

At ThingCo, we are seeing growing interest from brokers looking for flexible, telematics-based motor insurance solutions to offer their customers, recognising the huge pressures on household finances as well as the change in working patterns as a consequence of the Covid-19 pandemic.

Telematic policies offers a way for brokers to incentivise safer driving with discounts at renewal for the best drivers, while also helping intermediaries meet the FCA’s new pricing rules.

Telematics will also help lower income households when insurers really start to use the data at claim to lower their claims costs.

One of the best things about telematic solutions is that they put power into the hands of the consumer. By driving safely, motorists know their premiums will drop and make their time on the road more affordable.

Carl Shuker, group chief executive, A-Plan

Carl Shuker

Carl Shuker

The benefits of using a good quality broker is that we can best meet clients’ needs in terms of cover, price and offering instalments as a way of spreading the cost.

One of the things about price comparison websites is that customers are just comparing policies purely on price. To establish elements of cover and value, they have to do quite a bit of work themselves.

There are many different insurers offering many different types of cover. It is a complex world, but if individuals are on a budget, it’s best to speak to somebody, explain the budget and then they can work out with that broker what a minimum, viable cover is for them specifically.

We are almost in a perfect market where there are lots of players, so insurers tend to behave pretty competitively when they are looking for new business.

Elizabeth Foster, non executive managing director of the Society of Insurance Broking, Chartered Insurance Institute

Elizabeth Foster, board member, CII

Elizabeth Foster

Insurers and brokers have become so focused on driving business online that sight has been lost of a new vulnerable group - those that lack IT skills or cannot afford up to date devices.

With more and more need to complete proposals online, scan documents and receive policies and certificates online, there are those who need a broker to speak to them, complete the online process and provide hard copy documents.

Brokers can help by listening out for clients and identifying those who may not feel comfortable in the modern world of IT, or who may not be able to afford it. This demographic are most in need of affordable, no frills insurance.

Michael Lawrence, distribution and underwriting director, LV= GI Broker

Michael Lawrence, LV=

Michael Lawrence

It’s crucial that brokers fully understand their customers’ needs and help provide the right level of cover by focusing on value rather than cost.

For example, increasing the excess can sometimes help reduce the upfront cost of cover, but can the customer really afford to take the loss if they need to make a claim? Using a contents calculator or checking annual car mileage can help identify if a customer has the correct level of insurance.

Also, make sure that details at renewal are correct and that insured cars have been valued correctly. 

It is key that brokers help customers understand why having the correct insurance is so important - it’s there for when they need it, to protect them when things go wrong.

Richard Morley, broking director, Markerstudy Broking

The beauty of using a broker is that the customer speaks to an expert that can help them understand what level of cover is best. This can save the customer from being under or overinsured.

A good broker will have access to a strong panel of highly rated insurers, allowing it to source the appropriate policy for the customer at an affordable price.

Richard Morley, markerstudy, broking director

Richard Morley 

Being overinsured can mean paying too much and being underinsured can leave the customer exposed in terms of cover levels at the time of a loss.

Modern broking is about creating strong customer outcomes and achieving value for customers. By talking to a broker, the customer may find more flexibility and a better saving.