The Insurance Law Service has commented on a recent paper on Insurance Access released by Good Shepherd Microfinance. ILS agrees with Good Shepherd that 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 is working on a project 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.
In our comments to Good Shepherd we pointed out a number of insurance products that we believe are high-risk to low income Australians:
a. Funeral Insurance
b. Consumer Credit Insurance
c. Gap insurance
d. Insurance Products with Rising Premiums
We also pointed out that there are other types of insurance that disadvantage low income Australians because of their rising premiums. When someone is on a fixed low income it gets more and more difficult to afford to make rising premium payments. ILS submits that in many cases had low-income consumers known that the premiums were going to become unaffordable they would not have signed-up for the insurance policies in the first place.
ILS believes that a key issue for low income Australians and insurance is determining whether the premiums will be affordable for the required term of the insurance product. Consumers currently are not given this vital information.
To read our full comments, click here: Insurance Access Submission 2013