Scottish Government

3. REASONS UNDERLYING CHOICES MADE ABOUT HOME CONTENTS INSURANCE

This chapter will consider the three key questions which this study set out to answer:

• Why do tenants not take out home contents insurance?
• Why tenants do take out home contents insurance?
• What works to increase take up of home contents insurance?

It will consider the findings of three previous studies that have considered the reasons underlying the choices made about home contents insurance amongst social rented sector tenants and will also introduce evidence from primary research - the stakeholder interviews and the tenants' discussion and focus groups - undertaken for this study.

3.1 Why do tenants not take out home contents insurance?

Three previous studies that have considered the issue of the low level of take up of home contents insurance amongst certain sectors or communities were reviewed for this study:

• Paying for peace of mind: Access to home contents insurance for low-income households (1998) ¹⁹
• Widening the safety net: Learning the lessons of insurance with-rent schemes (2005) ²⁰
• Identification of barriers to tenants' take-up of low cost, high quality household contents insurance promoted by their landlord (2006). ²¹

The first two provide a general overview of the issue at a UK level, providing both secondary and primary research evidence. The third report was commissioned by SFHA with the support of their insurance broker, Jardine Lloyd Thomson to explore levels of take up amongst housing association tenants in Scotland.

Appendix 3 provides a summary of the methodologies used by these three studies.

'Paying for Peace of Mind'

The 'Paying for peace of mind' study, which was carried out by the Policy Studies Institute and the Institute for Public Policy Research in 1998, considered the level of take up of home contents insurance in all tenures. Its main findings were that:

• In 1998 around 20% of all households in the UK did not have home contents insurance
• Uninsured households were predominantly tenants and were disproportionately likely to have low incomes
• About half of the households interviewed for the study who were without home contents insurance had had a policy in the past but let it lapse, largely because they were facing financial strain
• The other half were mainly people on the margins of financial services who tended to have no bank account or savings.

The group who did not have home contents insurance consisted: " primarily of young, white households, mostly single but with high proportions of young families and lone parents. Many of the household heads are unemployed, have low incomes, are without bank accounts and have little, if any, money in savings. Most are tenants, living in deprived areas."

The report went on to suggest that: "it is 'financial strain' - the demands made on household income - and the cost and availability of home contents insurance, rather than simply income level, that determine the odds of a household being insured. In addition, personal characteristics [such as age, financial circumstances and attitude to risk] meant some households were less likely to feel they need home content insurance."

The report suggested that uninsured households were mainly aware of the risks they faced, especially in relation to burglary rather than fire or flood and divided uninsured households into four groups according to how they assessed risk and made decisions about insurance.

Risk averse
People who are acutely aware of risk and very anxious to mitigate it effects; they may have tried to get insurance but were prevented by problems of access and price.

Risk calculators
People who make an assessment of their personal risks and weigh these against the cost of insurance. Many of this group decide not to insure because they feel they face low risks or have few possessions to protect.

Risk resigned
People who are broadly aware of the risks and possible consequences of not being insured but because of tight financial circumstances may have been marginalised from financial services and are fatalistic about their circumstances.

Risk unaware
People who tend to have a relatively relaxed view of life and are less likely to have recent experience of a fire, flood or burglary.

The ' Paying for peace of mind' report suggested that the provision of insurance to low income households through intermediaries such as local authorities or housing associations can "overcome many of the barriers faced by households on low incomes", such as, marketing, policy conditions and affordability. Landlords can use their purchasing power to arrange home contents insurance cover at lower premiums than individual tenants can obtain from high street insurers. Acting as intermediaries, landlords can explain the insurance product to tenants with low levels of financial capability and with-rent schemes can overcome problems of financial exclusion ( e.g. not having a bank account) faced by some tenants with low incomes.

It recommended three measures to try to increase take up of insurance through landlord intermediaries:

• Expanding provision of with-rent schemes
• Improving take-up through active marketing
• Addressing poor levels of home security found in the most excluded areas in order to reduce the cost of insurance.

The first two of these recommendations have been the central element of the Scottish Executive's strategy to attempt to increase take-up of home contents insurance amongst social rented sector tenants since 2003. However, as has been shown by the latest Scottish Household Survey and the Scottish Executive's own survey although almost all registered social landlords provide or promote an insurance scheme to tenants and there was a substantial marketing campaign in 2004 this has not been enough to increase the overall level of take-up of home contents insurance amongst tenants.

'Widening the safety net'

The 'Widening the safety net' study was carried out by the think tank Demos and SAFE at Toynbee Hall in 2005. Building on the evidence from the 1998 study it identified the following as being the key barriers to social rented sector tenants accessing insurance:

Poverty:

• UK surveys show that only half of people in the lowest income decile possess home contents insurance compared to 78% of the adult population as a whole.

Product Design:

• Products that require direct debit payment deny access to the 'unbanked' - although measures have been taken to reduce the level of the 'unbanked' problem, many households on low incomes do not have bank accounts or, even if they do, they are unable to commit to taking out direct debits because of the irregularity of their income and/ or the lack of disposable income.
• Long term products, such as insurance cover, which is taken out on an annual basis, require a stable income.

Perceptions:

• Some young people believe that they do not need insurance because they do not have enough belongings.
• Some people, mainly young single people, think it is not for 'people like them'.
• People are confused by the messages and adverts and do not know which product they should choose.
• General lack of trust in the industry (fear of the small print and of being denied claims).

This study grouped people who do not have home contents insurance into four categories.

The constrained
The largest group of uninsured people are those who believe that they simply cannot afford it.

The carefree
People who believe insurance is only for those with something to worry about - a large number of possessions, old age or misfortune. These people focus not on, 'counting the pennies', but on living the good life with which they make little connection with insurance.

The confused
People who are nervous or confused about financial services in general and insurance in particular. These people may also be anxious about the 'hidden meanings' in adverts or policy documents.

The incredulous
People experiencing social exclusion can be distrustful of insurers and perhaps of insurance itself summed up by the quote: 'you think you're insured and then there's always a get out clause'.

The 'Widening the Safety Net' study reviewed measures taken by the UK government to tackle access to financial services generally, and the development of with- rent schemes for home content insurance specifically, as means of addressing low take-up amongst low-income households.

Echoing some of the findings of the earlier study, the 2005 report suggested that with-rent home contents insurance schemes "are more popular than other insurance for three main reasons:

• They work through trusted intermediaries rather than by a direct relationship between the insurance company and the client
• This intermediary offers advice and support for the client
• The popularity of schemes travels by word of mouth, a form of recommendation that people trust.

It suggested that take-up of home contents insurance among social rented sector tenants could be increased through both increasing the coverage of insurance schemes provided by intermediaries (landlords) and also increasing " customer uptake within schemes." Again this recommendation fits in with the measures taken to date by the Scottish Executive.

'Barriers to tenants' take-up of low cost contents insurance amongst housing association tenants'

The most recent study carried out in 2006 looked at the barriers to take up of insurance amongst tenants of housing associations in Scotland. This report was commissioned from the Cullen Centre for Risk and Governance, Glasgow Caledonian University by the SFHA supported by the SFHA's insurance brokers, Jardine Lloyd Thomson.

The study surveyed housing association managers and undertook one focus group of tenants from the Glasgow Housing Association ( GHA) to gain an understanding of why some take up of home contents insurance promoted by Scottish Housing Associations remains relatively low.

In summary the housing association managers who responded to the survey suggested that: " Home contents insurance would not be a priority for tenants on a low income or who have experienced past debt issues. In addition, there is a suggestion that many tenants may be under the impression that their housing association covers their contents insurance as well as building insurance."

The focus group with GHA tenants suggested that tenants who do not have insurance:

" in particular the unemployed and disadvantaged … did not perceive insurance as a priority, despite the fact that they may see its benefits. In a world of competing financial demands and a low/ fixed income, many in this position would either not consider or simply dismiss the notion of insurance."

Findings from primary research

The primary research for this latest study has focussed on interviews with stakeholders who provide or promote home contents insurance schemes to local authority or housing association tenants and a series of small discussion groups and focus groups with tenants in three areas. The small discussion groups involved a total of 25 tenants of whom:

• Seven had insurance cover provided or promoted by their landlord
• Eight had private insurance cover
• Ten had no home contents insurance.

The focus groups with GHA tenants in 10 LHOs involved 68 tenants of whom:

• Twenty four had insurance cover provided or promoted by their landlord
• Nineteen had private insurance cover
• Twenty five had no home contents insurance.

The findings of the stakeholder interviews and tenants' discussion and focus groups undertaken for this study reflect the conclusions of the three previous studies that have considered low take up of insurance amongst low income households and tenants.

The stakeholder interviewees suggested that the tenants who do not take out home contents insurance are predominantly low income tenants, young tenants and single parents. They further suggested that the two main reasons why these groups of tenants are less likely to take out insurance are that:

• They do not see it as being relevant or it is 'not for them'
• Tenants on low income cannot afford to, or choose not to, take out insurance because they have to make choices about where to spend the small amount of disposable income they have left over after rent and other unavoidable bills.

Fifteen tenants who participated in the discussion groups who home contents insurance suggested the following reasons why tenants might not take out home contents insurance:

• The cost of taking out insurance (real or perceived) could be a barrier to tenants on low income, especially single parents who are having to make hard choices about how to make ends meet. For example: "If they've got to choose between insurance and a loaf of bread for the kids, that'll come first; and there is people on that kind of margin."
• Tenants who are on full Housing Benefit, do not pay rent and so would have to pay their insurance premium for a local authority / housing association insurance cover separately from their rent

• Some tenants may not to be aware that their landlord does not cover contents through their insurance
• Some tenants, especially young people, do not think they need insurance and can get by without. For example: " They think the 'social' will cover them if something happens."
• Distrust of insurers - people think that it is very difficult to make successful claims from insurers. For example: "I think that's what puts people off insurance companies; they're quick to take your money but you put in a claim and they will niggle down to the last penny." and: "You're making a genuine claim and they make you feel guilty. It's a lot of hassle. It puts you off insurance companies."

Also, tenants in both West Dumbartonshire and Shettleston suggested that 'a lot of tenants in their area are drug addicts or alcoholics' and, taking out insurance "is the last thing on their minds."

The ten uninsured tenants who participated in the discussion groups gave a range of reasons for not having taken out home contents insurance. These can be grouped under four headings which are similar to the categorisations used by previous studies.

Lapsed
Four tenants stated that they had insurance cover but it had lapsed either when their spouse died (since their spouse had dealt with this) or when they moved into rented accommodation following divorce or separation. Each of them also said that they had not bothered or got round to taking out home contents insurance after they had moved to their rented accommodation. For example:

"When my wife was alive she dealt with it. After she died I just never bothered."(male; Shettleston)

"It was after my husband died, it just lapsed. I have never really looked into it since and I have never got round to it." (female; West Dunbartonshire)

One female tenant in Shettleston had recently allowed her private insurance cover with a high street insurer to lapse since it was too expensive and the level of cover provided was well above what she thinks she needs to be insured for. She has been looking into taking out insurance through GHA.

Not got round to it
Four tenants who had never had insurance stated they had thought about being insured but had not got round to taking out a policy:

One claimed that since his brother in law was having problems making a claim through his insurance he had begun to think about whether he should take out insurance cover. (male; Shettleston)

Another male tenant in Shettleston stated that he had got as far as filling in an application form but had not got round to returning it to the housing association.

A female tenant in Shettleston had thought about insurance but had never got round to taking it out and although " it does not cost too much I need to watch every penny."

The one East Lothian tenant who did not have insurance cover suggested that she: "has been meaning to get it but just never did anything about it. My dad keeps on at me to get it."

Not worth it
A male tenant (West Dunbartonshire) recounted that he had moved out of the family home (which had both buildings and home contents insurance) into a small one bedroomed council flat and felt he had too few possessions worth insuring. "Put it this way, I could go and buy a second hand television for about £50, and I could probably replace everything for £2,000, so I don't need insurance cover worth £35,000."

Unaware/ never thought about it
One tenant (female; Shettleston) admitted she was totally unaware of how insurance cover worked and had never really thought about taking out insurance.

The discussion groups did not suggest that the cost of insurance premiums is a significant factor in tenants not taking out home contents insurance. When asked about whether the cost of taking out insurance was a major factor in not taking out insurance cover all the uninsured tenants stated that they thought paying between £1.50 - £3 a week (the cost of a premium for cover of around £10,000 - £15,000) seemed all right and would be affordable.

For example, the following are some of the comments on the actual cost of taking out insurance cover through either a local authority or the SFHA Diamond Insurance scheme:

"I didn't realise it was so cheap (c. £1.50 per week). I thought it would be more than that." (male; Shettleston)

"£1.50 a week should be affordable. That's nothing, not even the price of a pint." (female; West Dunbartonshire)

One uninsured tenant did admit to being concerned about the cost of taking out insurance: "I need to watch every penny I spend." However, the main reason why she had not taken out insurance was that she had never got round to it, and thought that c. £1.50 a week was affordable.

Few of the tenants' that participated in the discussion groups were under 30 years of age. Most of the uninsured tenants were pensioners, unemployed or on incapacity benefit. Most were in receipt of full Housing Benefit and therefore were not paying rent.

Several of the uninsured tenants had no bank accounts and were under the impression that premium payment would have to be made by Direct Debit. However, they were satisfied that they would be able to make payments in cash, either at the local housing office or at the Post Office.

Only a minority of uninsured tenants could remember seeing publicity about their landlords' home contents insurance scheme, but several were aware that there was some form of scheme. Several of the uninsured tenants stated that a close relative (usually a parent) had been trying to persuade them to take out insurance.

Several tenants took away the publicity material and application form that had been used to facilitate discussion and suggested that they would seriously consider taking out insurance through the local authority or housing association scheme. This suggests that personal contact may persuade some tenants to take out insurance and supports the view that word of mouth and peer pressure could be an effective way to market the landlord insurance schemes.

The main issue arising from the GHA tenants' focus groups is that a significant number of tenants - both with and without home contents insurance - expressed a high level mistrust of insurance companies/ policies in general, and specifically of the GHA insurance scheme.

Few, of the actual examples given by tenants and reported below were from recent experience but they were still sited as prominent factors in determining the tenants' attitude to insurance policies in general and the GHA scheme in particular.

Almost a fifth of the tenants who participated in the GHA focus groups mentioned that they had personal experience (or had heard from others) of problems in making successful claims against a GHA insurance policy or had claims rejected. For example:

"Anybody I know that's with GHA has not been very happy with them."

"I claimed for dropping my iron on the floor and they told me in the small print I wasn't covered for accidental damage. I would have changed if I'd known that. They don't seem to stick to their promises."

"If you claim insurance then you're premiums go up, and it seems that they don't stick to their promises. I just don't trust them."

Several tenants suggested that their lack of trust of insurance policies was a main reason for their not having home contents insurance; whilst others stated that they had allowed their policy to lapse because they had had a claim rejected. For example:

"No I don't believe in it…my mum paid it for years and years and after the great storm she was lucky to get enough to decorate just one room. The insurance you can get through the Housing people is cheap though. It's just you pay into it for years and then they don't look after you."

"My wife hasn't bothered to insure us - can't see the point as they never pay out anyway."

"I stopped because they'd not pay out for flooding; they'll take your money but they'll not pay out.

"I used to have insurance but tried to claim and it was refused - that was with the council."

Few other reasons, apart from mistrust of insurance policies, were given by uninsured tenants in the GHA focus groups for not having insurance cover. Several tenants stated that they were not bothered or had just not got round to it.

"I've just never gotten round to it and when I've got the money I use it for something else."

"I am just not bothered enough to take it out."

Two tenants suggested that the policy/ paperwork is confusing and this contributed to their not taking out a policy.

"The policy is confusing so I just haven't bothered; some of their policies are really difficult to understand."

"It used to be that the man would come out and talk you through it, but now it is just loads of writing and I don't even want to start filling in the forms!"

Another two tenants suggested that the scheme could be better advertised.

"If it was advertised a lot more people would take it."

Summary

The uninsured tenants who took part in the discussion groups can be broken down into four different categories with the following characteristics.

Lapsed
Had previously been insured but had let their insurance lapse due to a change in personal circumstances and had never bothered or got round to taking out home contents insurance.

Not got round to it
Had thought about taking out insurance but had not been motivated enough to do it.

Not worth it/ too few possessions
Had thought about it but had made a decision not to take out insurance because they felt it was not worth it due to their having very few, if any, possessions of any value.

Unaware/ never thought about it
Had been unaware of home contents insurance and had never really thought about it.

In addition, the GHA focus groups revealed that a relatively high proportion of tenants in Glasgow have a high level of mistrust of insurance schemes, including the one operated by GHA.

Most uninsured tenants were concerned about the possible cost. Some had thought that they would need to take out cover for amounts well above the value of their possessions at a prohibitive cost. Many of these uninsured tenants were surprised that the actual cost for a low level of cover, which would be sufficient to cover the value of their possessions, might be as little as £1.50 a week. Very few tenants suggested that they or other tenants would not be be able to afford this level of premium payment.

3.2 Why do tenants take out home contents insurance?

Fifteen of the participants in the tenants' discussion groups had home contents insurance - seven had taken out a policy through their landlord and eight had taken out private cover through a high street insurance company.

Almost all tenants with insurance mentioned that they had taken out insurance to guard against loss of possessions due to burglary, fire or flooding (from overflowing bath or washing machine). Several tenants had had experience of being burgled before taking out insurance or knew a relative or neighbour who had been burgled and this had been a major factor in their decision to take out insurance cover.

Several of the older tenants stated that they had had insurance for many years - some at least 25 years - and that they had first taken out insurance after getting married and moving into their own home; as one of them said: " It's something our parents always told us to do. It's almost hereditary."

Five of the tenants with insurance were unemployed and seven were pensioners. None of these tenants stated that they had any difficulty paying the weekly or monthly premium payments.

Two of the tenants in West Dunbartonshire had changed from having a private policy through a high street insurer to the local authority scheme because their premium had been increased (one five years ago and the other two years ago). In both cases the tenant had heard through word of mouth from a neighbour or relative that the council policy was cheaper.

One of these tenants stated: "it may not be the best cover but at least I'm covered." Whilst the other stated that they were happy to take out the lowest level of cover.

Another tenant in West Dunbartonshire had changed from having a council policy to taking out a much more expensive policy through his bank. He had had a dispute with the council over another insurance matter and had decided to change insurance provision even though the new policy was more expensive.

The three insured tenants who took part in the discussion groups in Shettleston each had insurance through the GHA or housing association. One of these tenants had taken out the policy less than a year ago. "I had always had insurance in my other (owned) house and kept meaning to get it when I moved to the housing association house but only when the house was done up did I decide to take it out."

All seven tenants who had a local authority or housing association insurance policy welcomed the relatively low level of premium payments and were also happy to have relatively low levels of cover. Almost all the tenants who were eligible took advantage of the lower level of cover offered to tenants aged over 60.

As was highlighted above, on average across the whole of Scotland tenants are almost four times as likely to take out their own insurance cover in the market place than be part of the local authority/ housing association scheme.

The study did not gather quantitative evidence of the reasons why tenants are more likely to have their own cover but the tenants with private policies who took part in the' discussion groups suggest the following reasons:

• Some tenants took out home contents insurance when they got married/ settled down before they had moved into their present house and they had continued with that private policy when they moved to their council or housing association home.
• Some tenants had taken out insurance before the local authority or housing association established its scheme and they did not consider changing since they were happy with the cover provided and premium they were paying - customer loyalty
• Few tenants stated that they shopped around for cheaper insurance and would therefore keep their current private policy rather than consider moving to a cheaper local authority/ housing association policy
• Several tenants (particularly in East Lothian) said that their landlord's scheme would not provide enough cover - their privately arranged schemes provided £50,000 cover, possessions outwith the home (including caravan) and high value items.

The East Lothian discussion group included an unemployed tenant on full Housing Benefit who has taken out home contents insurance offered to her by her bank rather than through the council because it provided £50,000 cover and cover for high value items up to £3,000. However, she stated that she might consider switching to the council scheme since she probably does not need cover up to £50,000 and the council scheme appears to be cheaper. Although she would not be able to pay her premium with her rent as she is on full Housing Benefit she does have a bank account and already pays her premium by Direct Debit so could switch this to the local authority scheme.

Twenty four of the 68 tenants who participated in the GHA focus groups have taken out home contents insurance cover through the Council/ GHA scheme whilst a further nineteen have taken out private insurance cover.

Several tenants stated that they had taken out a private policy or had switched from a Council/ GHA policy to a private policy because of bad claims experience:

"I have private - I claimed once in my whole life and I was refused - I never think of claiming on it for small things. I would, if there was a burglary or something, but the GHA didn't pay out. That's why I am private."

"I've got private because anyone I know who's claimed from GHA has never had their claim approved. I've yet to hear of someone with a successful claim against them. I've heard horror stories."

However, several of the tenants with GHA insurance expressed satisfaction with the policy, low premiums and easy payment or had had a good claims experience. For example:

"Mine is automatically included in my rent because I'm in a furnished flat. I think that's a great system."

"The GHA one is really cheap for the elderly and there's a scale of policies which is great."

"I was amazed how cheap it is - it's great. So cheap I can't remember how much it is - I'm paid up months in advance."

" GHA is a good scheme. Monthly payments are very manageable."

"I had to ask about something that was damaged and I got it fixed ok." (through GHA)

One tenant with a GHA policy stated he would prefer to have a lower level of cover but this is only available to pensioners:

"I phoned them up and they said that the lowest premium I could take out was the £8,000 one, and I asked about the £5,000, £6,000, £7,000 options and they said that they were just for pensioners. Now, I'm not grudging how much you have to pay for insurance, it's very reasonable, but I don't have £8,000 in my house, I just want the £5,000."

Summary

Almost all tenants with insurance cover mentioned that they had taken out insurance to guard against loss of possessions due to burglary, fire or flooding (from overflowing bath or washing machine). Several tenants had had experience of being burgled before taking out insurance or knew a relative or neighbour who had been burgled and this had been a major factor in their decision to take out insurance cover.

Tenants who had taken out their 'private' insurance cover rather than their landlord's had done so for various reasons including taking out insurance before they had moved to their rented house or before the landlord scheme was available. Several tenants chose a private scheme because they wanted a higher level of cover than is available through their landlord's scheme.

Several GHA tenants reported taking out private insurance because of bad claims experience with the Council/ GHA scheme.

Although some tenants prefer to pay the lower premiums for lower level of cover available through the local authority with-rent scheme or the housing association scheme some tenants, including tenants who are retired and are unemployed, are willing to pay higher premiums for higher levels and standards of cover ( e.g. cover for high value items or for loss outwith the home) than is provided through their landlord's policy.

Tenants with insurance cover tend not to shop around and stay loyal to their insurance company unless they face a significant increase in premiums.

3.3 What works to increase take up of home contents insurance?

Evidence from previous studies

The Demos and SAFE at Toynbee Hall 'Widening the safety net' study ²² suggested that insurance take up can be increased through with-rent schemes, actively promoted through landlord intermediaries and by word of mouth. It further suggested that the take up of with-rent schemes could be increased through:

• Trust - intermediaries such as local authorities and housing associations are trusted more than insurance companies
• Working with tenants to design schemes
• Clear messages about the benefits of being insured.

The Glasgow Caledonian University report for SFHA and Jardine Lloyd Thomson ²³ suggested that the following measures could increase take up of the SFHA Diamond Insurance scheme:

• Training for staff (and training new staff) - to inform tenants at tenancy sign up
• Incentives to encourage tenants to join the scheme
• Easy payment by cash or swipe card
• Better information about policies, level of cover etc.

As highlighted above the Scottish Executive invested £500,000 in 2004 to support promotional campaigns run by local authorities and the SFHA to increase take up of home contents insurance schemes.

Local authorities and housing associations used, and continue to use, various methods to try to increase take up of their home contents insurance schemes, including:

• Adverts in tenants' newsletters

• News stories in newsletters
• Providing information and application form to new tenants at the tenancy sign up
• Verbal advice provided by housing officers
• Promotional leaflet mailed out to tenants.

Comparison with schemes operated by local authorities and housing associations in England and Wales suggests that there are is no 'magic formula' in relation to product or marketing that would be guaranteed to significantly increase the take up of local authority with-rent or housing association arms-length insurance schemes in Scotland.

The maximum level of take-up of with-rent or arms length schemes is around 28% compared to the highest take-up levels recorded in Scotland of around 24%. ²⁴

Stakeholders' experience

The stakeholder interviews with representatives of local authorities, housing associations, insurance brokers and underwriters suggested that word of mouth and providing information about the with-rent or arms-length scheme at tenancy sign up or at the subsequent 'settling in' visit are the most effective ways of encouraging tenants to take out insurance. Several stakeholders suggested that a follow up, either through a personal visit or sending out a proposal and application form 4 - 6 weeks after the new tenant's move in date is more likely to be successful than trying to get a new tenant to take out insurance cover at the tenancy sign up.

For example, the insurance broker responsible for the SIMPLE²⁵ insurance scheme operated by the Northern Housing Consortium in England speculated that the areas where take-up is highest are areas where they "have managed to get housing officers on board and they actively promote the scheme to tenants. Where the housing officers see and understand the benefits, the scheme if most successful."

However, several intermediaries promoting either with-rent or arms-length schemes to tenants expressed concern that front line staff offering information about insurance schemes could be construed as offering advice on insurance / financial matters and therefore might come under the Financial Services Authority ( FSA) regulations that govern the provision of financial advice. This can constrain the advice that can be given to tenants by housing officers. Some local authorities are working with their insurance brokers to ensure that front-line staff are adequately trained to provide information within the FSA regulations.

Insurance brokers and underwriters reported that they are considering new approaches to marketing insurance to groups that traditionally have low levels of take up - people on low incomes and young people - that involve:

• Improving the awareness of frontline housing staff about the benefits of financial inclusion of low income tenants; emphasising the benefits to the landlord of low levels of arrears and of tenants being insured
• Targeted marketing of insurance products to low income and young tenants, emphasising the low cost of insurance cover and the benefits of being insured in plain language with cartoons and simple bullet points
• Possibly also looking at new products that meet the needs of low income and young tenants; for example, offering cover against limited to catastrophe (fire and flood) which would reduce premium payments
• Working with tenants' organisations to develop new products designed to meet the needs of tenants and increasing use of word of mouth from peer group members as well as frontline staff.

Credit Unions could be a vehicle for promoting insurance cover amongst people on low incomes. However, the insurance product promoted by most Credit Unions via the national scheme operated for Credit Unions (the CUNA scheme) does not provide their members with many benefits over an insurance policy they might buy in the market place.

Some Credit Unions ( e.g. Cumnock and Doon Valley) are considering developing their services including providing access to a low cost insurance scheme. They are still developing their proposal and attempting to set up the Community Development Financial Institution through which these services will be provided to members.

However, although such developments would potentially reach some tenants who currently do not have home contents insurance this is unlikely to have more than a small impact on increasing the overall level of take of home contents insurance amongst social rented sector tenants.

Tenants' views and experience

Tenants who took out home contents insurance cover through their landlord are more likely to have heard about the scheme through word of mouth than through an advertising campaign. However, once they decided to take out a policy all were happy with the ease with which they were able to take out the policy and the easy payment methods - Direct Debit or weekly payment in cash.

The experience and comments of tenants who took part in the discussion groups suggested that the key ways in which to promote home contents insurance to tenants are:

• Through word of mouth from other tenants
• Follow up information and application form provided to new tenants after they move in to their home
• Providing easily understood leaflets and application forms at this and other times; e.g. with the rent notice
• Emphasising the low level of premiums and the availability of low levels of cover
• Emphasising the easy methods of payment - either monthly Direct Debit with rent or weekly, fortnightly or monthly in cash at the Post office of PayPoint outlets.

Summary

Previous studies into low take up of home contents insurance and the stakeholder and tenants' interviews undertaken for this study suggest that the following measures can be used to increase take up of home contents insurance schemes provided or promoted by social rented sector landlords.

• Active promotion of schemes by well informed and motivated housing staff including informing tenants when they sign their tenancy or at the follow settling in visit
• Working with tenants to design insurance schemes that meet the needs of low income households
• Easy payment methods such as with rent by direct debit and rent payment cards or cash payment in housing offices or post offices

• Marketing home contents insurance through clear, easily understood messages about the benefits of being insured and better information about policies, level of cover etc.
• Encouraging word of mouth from other tenants.