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4 October 2000
IWR MEANS WIN WIN WIN: AFFORDABLE INSURANCE FOR THE FINANCIALLY EXCLUDED
Tenants, housing providers and insurance companies can all be winners if insurance with rent (IWR) schemes become more widely available, Economic Secretary Melanie Johnson said today.
Addressing a conference organised by the Association of British Insurers, Miss Johnson said:
"IWR schemes introduced in the past year by three companies alone can reach over 200,000 people, mostly on low incomes in local authority or housing association properties.
"That is an excellent example of what can be achieved if we are determined to extend the reach of such schemes wider across our communities.
"Tenants can get affordable insurance; often advice and assistance with improving home security; and financial help and reassurance that they will not fall behind if they do fall victim to crime. They can also get access to long term savings opportunities.
"Local authorities, housing associations and the whole community benefit if property is protected, reducing repair and replacement costs, and making these communities better places to live for all.
"And insurers benefit too, by agreeing collective policies through a single channel, offering consistency and continuity in delivering insurance benefits, and increasing the cover they provide.
"Many credit unions are also offering affordable access to a wide range of insurance benefits covering both loans and savings, while some also offer redundancy and sickness cover as part of the loans.
"Success, over the long term, will require creative thinking, initiative, learning from successes and failures, and using all the resources available. No single organisation, product, or technology can solve the problems of financial exclusion. But partnerships such as these offer the possibility of a dramatic improvement for many thousands of people currently excluded from these benefits."
Under IWR schemes, the local authority (or social housing landlord) helps to provide property insurance cover more economically for tenants through group policies and deals with the collection of premiums. Tenants deal with their landlord agency, with which they already have an established financial relationship, and are helped to manage their financial affairs more easily through a stable means of payment of rent and premiums.
IWR schemes have enormous potential for helping people in deprived neighbourhoods. The Housing Corporation is funding an Innovation and Good Practice project on IWR schemes that will look at the level and nature of existing activity and identify the model that is most likely to maximise take-up by tenants. This will identify a model of best practice which should help to promote a greater take-up among the members of the National Housing Federation and insurance providers.
NOTES FOR EDITORS
1. In 1999, around 13 per cent of local authority tenants had taken out an insurance policy through their local authority, with an average number of households in individual schemes of 2,100. To be sustainable, a scheme needs around 500 tenants to join it.
2. Three leading IWR providers - CGNU, Royal & SunAlliance, and the Independent - are already responsible for about 120 schemes that offer cover to around 1.7 million households. Fourteen were launched during the last twelve months, with the potential to reach more than 200,000 people.
3. The members of many credit unions benefit from life insurance which covers both loans and savings. It ensures that any outstanding loan is paid off should a member die, or pays the nominated beneficiary an amount equal to the level of the deceased's savings. It provides free life insurance and encourages members to save. Both forms of insurance are paid by the credit union, and some also offer redundancy and sickness cover as part of the loans and collect the premiums on behalf of the insurance company.
4. Proposals to develop IWR schemes were set out in the report on financial exclusion by Policy Action Team 14 published in November 1999.
5. Media enquiries should be addressed to Charles Keseru in the Treasury press office on 020 7270 5188.