Discussion paper

Insurance for low-income Australians: taking innovative action

Public health Innovation Social security Work-life balance Australia

Good Shepherd Microfinance plays a significant role in promoting and maintaining the economic wellbeing of Australians through ensuring appropriate, affordable financial products are readily accessible to all, advocacy and research. This goes beyond social justice and dignity. The security and flexibility offered by savings, credit and insurance is essential to asset building, financial stability and economic inclusion for all Australians.

Limited availability, access to, and understanding of, insurance are significant contributing factors in financial exclusion for many Australians. It is generally understood that insurance is vital for protecting assets and securing a resilient future. Without insurance, it is not possible to accumulate assets safely and confidently or use everyday essentials such as a motor vehicle. Non-insurance also places huge burdens on society.

Good Shepherd Microfinance believes it is possible to insure sustainably a large number of Australians who are currently excluded from insurance or are unsure why or how the product could be of benefit to them.

Good Shepherd Microfinance intends to take action to meet the market and ensure all Australians have access to appropriate and affordable personal insurance products so that they can realise the benefits of insurance.

As with our other products and services, we are unable to do this alone; we need the input, advice and expertise of partners in the community, industry and government to achieve these goals. The economic case for increased financial inclusion is compelling, and would be of benefit to all stakeholders. The economic benefits of increased economic inclusion and financial mobility have been estimated to be $75 billion, and insurance is a vital aspect of this, to protect and replace assets and increase resilience to losses.

Before products and services can be delivered, however, a number of important questions need to be asked, discussed and answered about the best way to provide targeted insurance to those least able to absorb or recover from losses. The questions include:

1. What is the size of the non-insured low-income target market?

2. What is the pricing appetite of the target market for different products?

3. What products is the market interested in and would find the most beneficial?

4. What barriers keep people from having insurance, and how can they be overcome?

5. What barriers prevent the industry providing microinsurance products?

6. How can we best improve understanding of insurance and trust in the industry?

7. How can we increase insurance access and uptake among low-income Australians?

8. What are the specific needs of different groups, including Indigenous, recently arrived migrants and people with low literacy?

9. Who else is interested in this issue, and how can we collaborate?

This discussion paper has been produced in a bid to address these questions and to find ways to work with stakeholders in order to inform our program development and increase insurance access for all people on low or limited incomes.

Good Shepherd Microfinance acknowledges the financial and technical support provided by NAB without which this project would not have been possible. We are grateful to NAB for their commitment to increasing the economic inclusion of all Australians, especially through our existing partnership and while we pursue insurance access.

Good Shepherd Microfinance invites stakeholders and interested parties to provide feedback, advice and support, as well as consider ways of collaborating with Good Shepherd Microfinance in order to increase insurance understanding, access and uptake for all Australians.

If you are interested in more information or being involved, please contact Dominic Collins, at microinsurance@gsmicrofinance.org.au, or on (03) 9495 9634. Responses to the questions posed in this discussion paper are requested by Friday 19 April, 2013.

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