People are missing out on opportunities to improve their lives because of barriers put up by financial exclusion, a committee of MPs has heard.
The Treasury Committee heard from organisations specialising in dealing with the social and personal impacts of financial exclusion.
Kate Pender, chief executive of Fair4AllFinance said: “We constantly hear from people who have missed out on opportunities to improve their life and their outcomes because they can’t afford motor insurance.
“For example, I talked to a man at one of our conferences who had had to turn down a job.
“The job was in an adjacent town, he lived in a rural area.
“He could afford to buy the car that would have enabled him to accept that job, he couldn’t afford the insurance on that car.”
She later added: “The scale of the problem is really large.
“We’re talking about 20 million people in the UK in financially vulnerable circumstances.
“And it probably won’t surprise you if I say there’s almost not too much that you could do about this.
“I think it is really important that there is a whole of Government and whole of industry response across these financial inclusion issues.”
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
Go to website
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
Go to website
ADVERTISEMENT
Helen Undy, chief executive of the Money and Mental Health Policy Institute, told the hearing: “The travel insurance work that we’re doing with the ABI (Association of British Insurers) starts from the perspective of let’s understand whether risk-based pricing is currently using accurate and up-to-date evidence about people’s mental health.
“Because the prices that we’re seeing coming out are so high that it feels as though an update to that data, how it’s used, how it’s interpreted, might be needed.”
She added: “We found in our research that somebody with bipolar disorder, for example, is seeing increases ranging from 250% to 980% in their travel insurance premium when they disclose their bipolar disorder.
“Now we are not naive, I understand that’s how the insurance market works, you know, risk is priced, and it is more expensive if you have a pre-existing health condition, but we still saw increases of 240% for people with depression.
“So we felt in our research that the disconnect between the severity of people’s mental health problems and the price increases meant that it deserves further investigation.”
She added that it was not a niche market issue and “signposting to specialist providers isn’t good enough when one in four of us have a mental health problem.”
Ms Undy also highlighted the importance of integrating debt advice with other public services.
After the hearing, an ABI spokesperson said that, regarding travel insurance: “Insurers understand the importance of making sure people can get the protection they need.
“We’re committed to removing barriers and closing protection gaps, and continue to work closely with government, consumer groups and charities to support ongoing improvements.”
Speaking about motor insurance, the ABI spokesperson added: “Insurers recognise how essential motor cover is for households and fully understand the financial pressures many families are facing.
“While a range of factors – such as persistently high claims costs and wider inflationary pressures – pushed premiums up in recent years, it was encouraging to see that cost pressures eased last year.
“Motor insurers are working hard to keep cover as affordable as possible in a highly competitive market, but we know there is more to do.
“That’s why the industry continues to drive forward its 10‑point roadmap and is working closely with government and regulators to tackle the underlying cost pressures that affect premiums.”