Contents insurance can be expensive and for those with few assets the cost may be greater than can be rationalized. For low income earners with a few precious belongings though, theft or loss could be devastating.
Good Shepherd Microfinance, in partnership with major insurer IAG, is attempting to overcome this affordability issue with the launch of a new contents insurance product: Insurance 4 That. Designed for low income earners, the product allows people to insure single items, which keeps the cost of insurance down while giving customers the power to decide what matters to them. Good Shepherd Microfinance is piloting the product with a range of community providers.
Insurance 4 That was developed following extensive consultation with consumer and community groups, with growing concerns budget pressures were preventing certain parts of the community taking out contents insurance to protect their most needed assets, with insurance accessibility is a growing concern for many individuals and families from all walks of life.
Canstar caught up with Peter Collis, National Program Manager – Insurance to find out more about the barrier to insurance.
Q: The statistics around the number of households (owners and renters) without contents insurance are quite frightening. Do these statistics surprise you at all, or are they expected?
A: That 67 per cent of renters are without any form of contents insurance in Australia is worrying but perhaps not surprising, after all there are 3 million people in Australia who are financially excluded.
That’s what makes our insurance work so exciting – we’ve developed a product that is tailor made for people on low incomes and breaking new ground in doing so. Thousands of people will benefit from this innovative and ambitious product.
Q: What are the main barriers to holding contents insurance?
A: Affordability and product complexity are two of the major reasons people are uninsured. Insurance 4 That addresses both these issues by allowing customers to make a straightforward choice about what is and isn’t covered which, in turn, keeps the cost of the premium for the product down. Insurance 4 That also comes with the flexibility of weekly, fortnightly, monthly or annual payment options which is great for enabling the client to manage their budget according to their own particular situation.
Q: Why is it so important for households to be able to insure specific items?
A: Insurance 4 That offers people on low incomes who are on a tight budget the opportunity to tailor their policy by insuring those items they rely on while keeping premiums low.
It gives customers the power to decide what matters to them, so if something goes wrong, they’ll be able to replace that item whether it be the computer, fridge, or phone and get on with life.
Q: How long and what was the product design process that you undertook for this initiative?
A: The product design took about 12 months and was developed by taking a customer centric approach, undertaking research, and consulting community groups and regulatory bodies. It took a close collaboration between Good Shepherd Microfinance and IAG Labs to conceptualise, design and deliver such a unique product.
The new product allows customers to select the exact items in their home to insure and nominate a sum insured value, with cover provided for damage or loss caused by theft, fire, flood, storm and cyclone. There is also the option to take out additional cover for portable items against theft anywhere in Australia.
Under Insurance 4 That, protection is available for items such as:
- Mobile phones
- Tablet computers
- Digital cameras
- White goods such as refrigerators and washing machines
- Musical instruments
- Medical devices such as hearing aids and glasses.
You can find out more here.