Matt Saker, President at the Institute and Faculty of Actuaries, said: “The SMF’s in-depth research makes an important contribution to developing a greater understanding of the poverty premium. We support its recommendations which build on our 2021 joint report with Fair By Design on ‘The hidden risks of being poor: the poverty premium in insurance’.
“The SMF analysis on the drivers of the poverty premium will be helpful in identifying appropriate policy interventions and which government departments, regulators or organisations could be responsible for driving policy change. Any assessment of potential interventions should be made through engagement with consumer groups and insurers to gain insight on the merits of differing interventions and to reduce the risk of unintended consequences for vulnerable customers. This is especially important in the current economic climate when more customers are facing cost of living challenges.
“We welcome the SMF’s suggestion that the Financial Conduct Authority (FCA) investigates the scale of the poverty premium in differing insurance markets. Another important area for the FCA to consider will be a market review of single product cover which many lower income families rely on. These products are used to insure items such as smart phones, computers or white goods, but there could be cases where a standard contents insurance policy may provide a cheaper option.”
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