United Kingdom
Without home contents insurance
Key points
- As long ago as 1999, home contents insurance was identified alongside bank accounts as a key aspect of financial exclusion by the government's report on Access to financial services. In the wake of the 2007 floods and the damage they caused, home contents insurance – or rather the lack of it – has ceased to be just a matter of academic or policy interest.
- Half of the poorest households do not have home contents insurance, compared with one in five for households on average incomes. Both the proportions and the gap between them are similar to a decade ago. This lack of progress contrasts unfavourably with the progress that had been made with bank accounts.
- Households with no home contents insurance are more than three times as likely to be burgled as those with insurance. While the underlying crime statistics show that the likelihood of burglary has fallen for both households with and without home contents insurance, this unfavourable ratio has remained broadly constant.
- By definition, low-income households without households insurance are less financially able to replace stolen goods themselves.
Graph 1: Over time
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Graph 2: By risk of being burgled
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Why this indicator was originally chosen
Financial loss affects those on low incomes most. Furthermore, the costs of protection against crime, including household insurance and strong locks, personal alarms and taxis, are less affordable for poorer individuals. And, clearly, those on low income but without household insurance are, by definition, are less able to replace stolen goods themselves.
Insurance is a special case as low income areas with high rates of crime typically have the most expensive premiums for home contents insurance, making insurance for those whose need for it may be greatest particularly unaffordable. Poor people therefore have a lower ability "to insulate themselves against risk and contingency" Danziger N, 1997, Danziger's Britain, Flamingo. and the resulting fear of crime damages social cohesion and lowers trust. The chosen indicator focuses on home contents insurance and the connection between the need for the service provided by insurance and its actual take-up.
Many forms of insurance, especially car and home contents insurance, discriminate by postcode and thus impact upon areas rather than just individuals. Insurance can cost up to six times as much in postcode areas that insurance companies consider high risk, as in low crime areas. Anonymous national insurance company.
Definitions and data sources
The first graph shows, for the latest year, how the proportion of households without home contents insurance varies according to the household's income. Note that the allocation of households to income quintiles uses gross 'equivalised household income', which means that the household incomes have been adjusted to put them on a like-for-like basis given the size and composition of the households. The data source is Expenditure and Food Survey (EFS) and relates to the United Kingdom. For comparison purposes, the equivalent data from the Family Expenditure Survey for a decade earlier is also presented, although survey limitations mean that the division into income quintiles here is based on unequivalised and unweighted income.
The second graph shows the proportion of households with, and without, home contents insurance that were victims of a burglary one or more times in each of the years shown. The rates have been estimated using data on burglaries from the British Crime Survey (BCS) and data on household insurance from the EFS. The estimates are for England and Wales. Note that data for years earlier than 1999 has not been included in the graph as it was collected on a different basis (via a direct question in the BCS) and is therefore not directly comparable.
Overall adequacy of the indicator: medium. The BCS and EFS are well-established government surveys, which are designed to be nationally representative.
External links
- See the New Policy Institute's 2007 report for the Friends Provident Foundation entitled A snapshot of financial inclusion. Policy and practice in the UK 2007. Also see their other reports entitled Meaningful choices: the policy options for financial exclusion, More than just a PIN number: young people, financial responsibility and exclusion, Gateways: route to financial services, Quality assurance or benchmarking? Presenting information about pensions and Financial exclusion: can mutuality fill the gap?
- See the 1999 Treasury report entitled Access to financial services.
- For a discussion of some of the issues relating to older people, see Help the Aged's 2007 policy statement.
- For a discussion of some of the issue relating to young adults, see Centrepoint's 2005 report entitled Too much too young, problem debt among homeless young people.
- For a discussion of some of the issue relating to children, see the Financial Services Authority 2000 report entitled A cycle of disadvantage?.
- For a discussion of some of the issue relating to rural areas, see the Commission for Rural Communities 2007 State of the Countryside report.
Relevant 2007 Public Service Agreements
None directly relevant.
The numbers
Graph 1
| Income quintile | 2007 | 1997/98 |
|---|---|---|
| Poorest | 52% | 56% |
| 2nd | 27% | 34% |
| 3rd | 20% | 21% |
| 4th | 14% | 15% |
| Richest | 12% | 7% |
Graph 2
| Year | Burgled with and without insurance | |
|---|---|---|
| Households with insurance | Households without insurance | |
| 1999 | 4% | 11% |
| 2001/02 | 3% | 10% |
| 2002/03 | 3% | 10% |
| 2003/04 | 3% | 10% |
| 2004/05 | 2% | 8% |
| 2005/06 | 2% | 7% |
| 2006/07 | 2% | 7% |
| 2007/08 | 2% | 7% |
| 2008/09 | 2% | 8% |