Developing models for delivering insurance through CDFIs - opportunities and risks

The present study looked at the feasibility of delivering insurance products through the UK Community Development Financial Institution (CDFI) sector. Its UK-wide presence and experience of working with financially excluded consumers would suggest that the sector could potentially be an effective conduit of insurance. The focus of the study was mainly on Home Contents Insurance (HCI) and on life insurance. This was because low-income households are at greater risk of and are vulnerable to death of a household member and loss of home contents, given that they live in high-risk areas and often rely on a single income. In order to ascertain the feasibility of a CDFI insurance delivery model, we conducted focus groups with actual and potential target CDFI clients to understand the extent and nature of demand for insurance products. We reviewed the experiences of eight international and UK insurance schemes aimed at the financially excluded to understand key challenges and potential mechanisms related to the delivery of insurance to low-income, financially excluded households. Finally, in order to understand the legal opportunities and barriers for the provision of insurance through CDFIs, we examined the regulatory framework for insurance provision.

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