MEDIA RELEASE: SACOSS is releasing a new report: Protecting the Basics: Insurance access for people on low incomes at risk from climate emergencies.
The report finds that there is a significant proportion of people in South Australia on low incomes with uninsured homes, contents, and cars because they can’t afford insurance. It highlights the potential negative consequences in the face of natural disasters, and proposes several strategies that government could take to increase access to insurance for people on low incomes.
"As more households experience financial stress due to the COVID-19 pandemic, more and more households are likely to be unable to afford their insurance premiums, and be letting their cover lapse," said SACOSS CEO Ross Womersley.
"When a natural disaster hits, people in this situation face catastrophic financial losses that they may not have the resources to recover from. They may fall into poverty, have their poverty further entrenched, or even end up pushed into homelessness.
"Insurance must be treated as an essential service. Government natural disaster planning relies on individuals purchasing appropriate insurance for their home, contents, and vehicles.
"If access to insurance for people on low incomes is not addressed, we face potentially catastrophic social and financial outcomes in future natural disaster seasons, which may result in a greater number of people experiencing poverty.
"SACOSS is calling on the government to step up and tackle insurance unaffordability.
"We urge the government to implement a percentage-based concessions scheme for people on low incomes to receive rebates on their home, contents, and vehicle insurance premiums.
"Redressing the current situation is urgent. Access to insurance must be improved before the next severe natural disaster season reveals the extent of individual, societal, and financial costs of uninsurance in South Australia," he stated.
South Australian financial counsellors can attest to the potentially devastating impacts of not having insurance cover.
The South Australian Financial Counsellors Association's Executive Officer, Kate Fox, said that financial counsellors know all too well how hard this blow can strike.
“Financial counsellors have seen the impact of not having insurance cover for essentials such as home, contents and vehicles. It is often already a difficult time personally for people to deal with such a loss and then to add to that the financial burden of not being insured or being underinsured, the consequences can be devastating,” she stated.
"SAFCA supports SACOSS’s proposal for a concession scheme to provide access to affordable and appropriate insurance options for people living on low incomes as essential to provide cover for loss after natural disasters and unexpected events.”
Charitable organisation Good Shepherd is also acutely aware of the barriers for people on low incomes taking out insurance. "Cost is a major obstacle as well as the complexity of policies, the claims process, and comparing options for low-income households and vulnerable populations,” said Good Shepherd CEO Stella Avramopoulos.
“What SACOSS is proposing would be a vital step towards addressing some of these obstacles for people on low incomes, particularly with the increasing impact of climate change and disasters on vulnerable communities,” Ms Avramopoulos said.
Insurance premiums have been rising, and they are not affordable for everyone.
- South Australian insurance premiums are increasing rapidly - the most recent CPI data show that for Adelaide, insurance premiums for home, contents and vehicle insurance on average increased by 8.5% in 2021 (compared to an increase of 3.4% nationally).
- Of low-income households where people own their home, it is estimated that between one in 10 or 15 of those households do not have home insurance.
- Approximately one in two or three people who are living on a low income do not have contents insurance.
- One in four people who are on a low income and have a vehicle, do not have comprehensive vehicle insurance.
The Protecting the Basics report is available here
*Note: the survey ranges reported above reflect the fact that we have drawn on a range of surveys in these areas, which report some differing results.