According to Good Shepherd Microfinance, 20% of adults in Australia do not have general insurance cover for their contents, car or home. Many of these people are living on low incomes, and this is often a major problem.
“Without insurance, it?s not possible to use everyday essentials, such as a car, with the peace of mind that comes with knowing you are protected if bad luck strikes,” said Good Shepherd Microfinance CEO Mr Mooney.
“Our experience with financial programs for people on low incomes shows just how easy it is to slip into hardship after a financial shock such as the loss of a family asset which can be expensive to replace.”
The partnership between the two organisations was first announced in 2014 and since that time Good Shepherd Microfinance and Suncorp have worked with external advisors to build a relevant, affordable and simple insurance product from the ground up. The result is the new Essentials by AAI product.
For the first time in Australia an insurance product will allow people to ?mix and match? cover for contents and cars, with premiums starting as low as $4.00 per week.
Mark Milliner, CEO of Suncorp Personal Insurance, said the people who don?t have insurance are often the ones who need it the most.
“Working with Good Shepherd Microfinance has helped us to better understand the needs of those doing it tough. We?ve found that traditional insurance is often too expensive for them, and in many cases the level of cover is simply too high,” Mr Milliner said.
In an Australian first, Essentials by AAI will be unique in the flexibility of its payment options, including fortnightly direct debit and payment via Centrepay which aligns a person?s income with the payment of their premium.
Canstar caught up with Mr Mooney to find out more about the development of the ground breaking new product.
Q: Essentials by AAI is a fantastic achievement. What were the relative strengths that Suncorp and Good Shepherd Microfinance brought to the process?
A: We took a shared value approach to the development of our Good Insurance program, of which Essentials by AAI is a key product offering.
By leveraging each other?s expertise we?ve been able to fill a gap and create an opportunity for people on low incomes to protect their assets in a safe and affordable way. Good Shepherd Microfinance has an in-depth understanding of this market through our work offering no and low interest loans to people on low incomes. We also have an extensive network of local community partners in 670 locations across Australia who can have an insurance conversation with a client at the time of applying for a small loan to purchase an asset like a fridge or a second hand car. Suncorp, of course, brings its significant resources, skills and expertise in insurance to the table making this a very strong and mutually beneficial partnership.
Our comprehensive understanding of financial exclusion in Australia informed the development of the Essentials product to ensure it was relevant, affordable and easy to understand. In turn Suncorp was able to build a model that ensured the product would be sustainable. By seeing this market as a viable one, we have created an Australian and possibly a world first in the insurance sector.
Q: What other external advisors were involved in the process? How long did the overall process take?
A: Together with Suncorp, we consulted extensively with community organisations who are on the frontline with our clients. Through their daily work they really understand the challenges people on low incomes face. They were able to inform us with knowledge and experience on what features an insurance product like this would need in order for it to be relevant to their client groups.
The organisations and advisors we consulted with included community organisations like Kildonan UnitingCare, financial counsellors, legal aid organisations such as Footscray Community Legal Centre, the Financial Ombudsman Service, researchers and consumer advocates such as Consumer Action Law Centre.
Before launching this product, we conducted a pilot with several of our local community providers where we offered the AAMI renters product to clients who were applying for a no interest loan. The learnings from this pilot informed Essentials by AAI and resulted in product features such as the ability to have contents and car insurance on the one policy.