Non Insurance: Who, Why & Trends

The Insurance Council commissioned the study “The Non-insured: Who, Why and Trends” into non insurance by Dr Richard Tooth and Dr George Barker of the Centre for Law and Economics at the Australian National University to add to the body of knowledge on non insurance in the Australian community.

Principally, this new research finds that non insurance remains a significant issue in our community. The attached report uses both the Australian Bureau of Statistics Household Expenditure Survey and the Roy Morgan Single Source Survey to comprehensively profile the non-insured and considers the impact of government policies on non insurance.

Report Findings:

• Affordability is a significant constraint on insurance and that State taxes impact on insurance affordability and in turn, non insurance.
• Home type and tenure are critical drivers of non insurance for both buildings and contents cover although demand for contents insurance appears to be more price sensitive than building insurance.
• Non insurance is lower for those with a mortgage than those without, although non insurance escalates the longer the age of the homeowner’s mortgage.
• Disconcertingly, that those individuals with fewer savings (and hence those more vulnerable to loss) are also more likely to be non insured.
• Non insurance is more prevalent at the early stages of life (ie singles, the young etc).
• Non insurance is more prevalent in urban centres and in particular, specific urban localities in our major capitals.

The report also provides a review of the impact of State taxes on non insurance and concludes that States with high levels of insurance taxes also face greater rates of non insurance.

The Non Insured: Who, Why and Trends report represents a major contribution to better understanding non insurance in Australia. The Insurance Council is keen to ensure that debates on insurance are conducted within an evidence based framework and in this regard, the Who, Why and Trends report adds to the body of evidence on this important economic and social challenge.

Key Issues:

According to the Australian Bureau of Statistics, approximately 1.8 million Australian households have no house and contents insurance – that is 23% of all Australian homes.

Non-insurance has an important flow on effect to Governments in that if individuals in the community can be encouraged to put in place measures to mitigate risk, then the incidence of Governments being called upon to provide ex-gratia assistance to individuals and businesses affected by disasters will be minimised.

The Insurance Council is keen to collaborate with government on this important issue in the Australian community in an effort to promote the community’s take up of insurance to enable risk mitigation and protection.

For a PDF verison please click here.