How insurance contributes towards financial inclusion and affordability

Financial inclusion, including affordability, is a core priority of regulators and businesses. Being able to offer the best-in-class experience and make accurate decisions is integral and an ongoing strategic investment for nearly every business in every sector, including insurance.

The Financial Inclusion Commission stated in their Insurance Inclusion Report, that there has been much discussion around improving access to banking and payment services, savings, and affordable credit, while insurance has so far been forgotten. The impact of not having adequate cover can be far more serious, particularly for those with lower incomes. In the introduction to its report, the Financial Inclusion Commission notes that: ‘Insurance gives people the peace of mind to plan beyond day-to-day expenditure, protects against financial hardship, and helps build financial resilience in an uncertain world’ . Without that safety net, vulnerable people can become even more so.

In our research on motor insurance, we found that most people (71%) opt for increased excess in their premiums in order to make the policy more affordable. The challenge here is that should there be an incident, the policy holder may well have uninsured themselves as they can’t afford the excess they have. There are obvious repercussions to this. Firstly, you and your customers are at risk, should there be a need to claim. Secondly, if the vehicle is unusable and therefore unfixable, there could be a domino effect on the person caused by an inability to travel to work which could have a much more severe impact on their financial stability.


“71% opt for increased excess in their premiums in order to make the policy more affordable”


Another angle to consider is the whole cost of the car. While insurance is one part of the deal, there is servicing, MOT, running of a vehicle, potential finance arrangements and more. Often, specifically for younger drivers, the incentive of a year’s free insurance is a golden ticket. However, the finance plan spans longer than a year and come the second year, the owner is suddenly faced with a bill which is, on average, over half of young drivers’ running costs.

This is where affordability is particularly important. Understanding the components of customer affordability at the earliest opportunity is vital for making accurate affordability checks as part of the customer journey. This will help identify consumers undergoing financial difficulty, giving better outcomes as customers can be offered appropriate payment options tailored to their circumstances, ensuring potentially vulnerable customers are treated fairly.

How can Experian help?

Our iCache Affordability Check is the quick and easy way to check whether a consumer can afford to pay for your insurance products and services. All provided through our dedicated insurance data delivery platform iCache, helping you to also meet FCA guidelines.

Using just three simple commonly collected pieces of information; the name, address and date of birth of the applicant, we can then provide the personalised insight about an individual required for you to make informed decisions as to whether the product selected is affordable for them.

Whether used at the point of quote giving the best customer experience; or at the point of sale; delivered in real time; or as a batch process; iCache Affordability Check gives you confidence that every customer can afford their insurance policy payments. The result? You’re working in the best interests of the customer while minimising your risk and creating new opportunities to strengthen your relationship.