Addressing Insurance for Low Income Australians

A new discussion paper calling on government, insurers and the community sector to work together to provide insurance cover for Australians living on low incomes has been released.

The paper, Insurance for low income Australians: Taking innovative action, by Good Shepherd Microfinance explores the issues and potential barriers to offering a targeted insurance product for some of Australia’s most vulnerable people.

Insurance costs, distribution, regulation, affordability and demand are some examples of the current barriers facing Australians living on low incomes who wish to obtain insurance, says Good Shepherd Microfinance’s Dominic Collins.

“What is vital is to find some way of protecting those who are least able to absorb or recover from unexpected losses,” Collins said.

“Insurance is an essential element of being economically included, providing benefits far beyond restoring a policyholder to their former position should they suffer a loss.”

Collins said there was an opportunity to reach many potential customers, improve industry reach, promote a valuable product, address current financial exclusion concerns.

“We know internationally that it is possible to insure this market sustainably and affordable with creative products and collaboration, so there is no reason why it cannot be offered in Australia.”

Good Shepherd Microfinance is concerned that many people who are already struggling financially do not have insurance for their home or contents.

“While all insurance products will not be appropriate for all people, higher insurance uptake has benefits for many stakeholders as it increases resilience, protects assets, reduces the burden on welfare and relief agencies, and provides peace of mind for the insured that they can confidently accrue assets or use a motor vehicle,” said Mr Collins.

Responses to the discussion paper are due by Friday April 19. The paper is available from the Good Shepherd Microfinance website.

Good Shepherd Microfinance acting chief executive Michelle Crawford called for all stakeholders to be involved.

“I encourage all stakeholders to respond to our discussion paper and we look forward to collaborating with community, government and industry,” Crawford said.

Meanwhile, the Federal Government has announced its affordable-loans scheme, which enables people under financial pressure to buy household essentials, will be expanded into six regional and remote communities across Australia.

The Minister for Community Services, Julie Collins, announced an expansion of the No Interest Loans Scheme (NILS) in and around Darwin, the Kimberley, Alice Springs, the Anangu Pitjantjatjara Yankunytjatjara (APY) lands, Rockhampton, Mt Isa and Cairns.

The microfinance scheme is run by the Good Shepherd Microfinance with funding from the Federal Government and NAB, in partnership with a range of organisations that deliver the scheme in local communities.

“This expansion of NILS will ensure people living in these regional and remote areas, and particularly Indigenous Australians, will also be able to benefit from the scheme,” Julie Collins said.