UK life insurers are “failing to address the needs of low to middle income earners,” according to a new survey by Swiss Re Life & Health Limited, which has warned that many consumers are progressively losing touch with the industry.
According to the insurance report, Whose risk is it anyway?, 6.8m households with annual household incomes of between £9,500 and £24,999 are susceptible to 'financial exclusion' and do not save enough to obtain adequate life protection. Consumers in these income groups are 50% more likely to insure the contents of their home than their life.
The report identified a number of key barriers to the purchase of insurance. Top of the list is the affordability of financial protection, where consumers struggle to balance its cost against other household priorities.
The report also revealed the extent to which the lack of financial know-how excludes thousands, with access to financial advice a major obstacle to consumers who do not know where to go to get help with purchasing suitable products. Potential customers are also confused by the range and complexity of products available to them.
The findings suggest the government has some way to go before the industry can meet the Treasury's target for the usage of insurance by low income households to grow to similar levels to other social groups by 2005. In response, the report makes a series of recommendations as to how the industry can extend the reach of financial products to the financially excluded.
Alan Tyler, health and welfare strategy manager at Swiss Re Life & Health Limited and co-author of the report, says: “The more people understand the risks that they run and how to protect themselves from the financial consequences of those risks, the more the solutions offered by the industry will be appreciated. However, without advice consumers will not rush to buy products they do not understand to meet needs they cannot quantify from people they do not trust.”