Evidence from previous studies
The Demos and SAFE at Toynbee Hall ‘Widening the safety net’ study22 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 Thomson23 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.
22 Demos and SAFE at Toynbee Hall (2005) Widening the safety net: Learning the lessons of insurance with-rent schemes (Demos)
23 Dr Hood J, Dr Stein W and McCann C (2006) Identification of barriers to tenants’ take-up of low cost, high quality household contents insurance promoted by their landlord (Unpublished report for the Scottish Federation of Housing Associations)
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.
24 Reports by an insurance broker in stakeholder interview for this study
25 Simple Insurance Making Peoples’ Lives Easier
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.
4. Recommendations
1. The Scottish Executive should consider whether further (quantitative) research is needed to identify the characteristics of tenants who have taken out insurance either through their landlords’ scheme or who have made their own arrangements. This might take the form of an additional question or questions in the Scottish Household Survey.
2. The Scottish Executive, through Communities Scotland, should continue to monitor how local authorities and Housing Associations are improving access to and take-up of home contents insurance.
3. The Scottish Executive should continue to support the development of new home contents insurance products and marketing of such products by local authorities and Housing Associations.
4. The Scottish Executive should instigate discussions with COSLA and the SFHA to consider whether the setting up a consortium or consortia would reduce procurement costs for home contents insurance scheme thereby reducing premiums and/ or providing extended cover for tenants including:
cover against accidental damage
personal possessions outwith the home
higher maximum cover
lower levels of minimum cover.
A consortium approach would also allow smaller authorities, including the three Islands Councils that currently do not operate insurance schemes for tenants, to benefit from economies of scale.
5. Local authorities and SFHA (or, if established, the new consortium) should work with their insurance brokers to design schemes that are most relevant to their tenants’
needs. This could involve using Tenants’ Surveys, Focus Groups and consultation with Tenants Organisations to identify what would encourage and make it easier for low income tenants to take out insurance cover. Consideration should be given to the development of new products that might attract low income households, in particular young single people and single parents to take-up home contents insurance; e.g.
extending the lower level of cover currently only available to older tenants to all tenants.
6. Local authorities and SFHA should consider providing an ‘opt out’ scheme for tenants in sheltered housing based on the scheme operated by Hanover (Scotland) Housing Association.
7. The operation of with-rent schemes in respect of tenants who are in rent arrears should be reviewed in order not to exclude tenants who are in rent arrears from taking out insurance or cancelling the policies of tenants who get into rent arrears. For example,
with-rent schemes allow tenants who are on full Housing Benefit, and therefore do not pay rent, to make alternative arrangements to pay their insurance premium. This facility should be extended to tenants with rent arrears.
8. Local authorities and the SFHA/ housing associations should consider improving the marketing of their home contents insurance schemes. For example:
ensuring that all new tenants are provided with information about the insurance scheme and an application form not only when they start their new tenancy but also at the follow up/ settling in meeting or visit when they are more likely to be receptive to considering taking out an insurance policy
providing a leaflet, application form and free post return envelope with the annual rent notification letter and in tenants’ newsletters
emphasising in all publicity about the scheme the possible impact of not being insured and the relatively low cost and easy payment methods attached to the scheme, using actual examples from tenants
working with and encouraging tenants’ organisations to actively promote home contents insurance amongst tenants
aiming marketing at specific target groups in particular, the elderly, young single people and single parents
providing information to counter the mistrust of insurance schemes that is evident amongst some tenants e.g. in relation to claims procedures and experience
improving the awareness of frontline housing staff about the benefits of financial inclusion of low income tenants; emphasising the benefits to the landlord of tenants being insured and encouraging them to promote home contents insurance to tenants. Training of frontline staff to inform tenants of the insurance scheme will need to take account of FSA regulations.
APPENDIX 1: STAKEHOLDER INTERVIEWEES