Many low- and moderate-income households need more insurance and want to know more about it, according to a recent study by the Federal Reserve Bank of Chicago. Overall, these consumers hold positive views about insurance, and they anticipate using an insurance agent to purchase it.
“Many study participants had assets that they wanted to protect, for which they did not already have coverage,” said Robin Newberger, business economist in the Consumer and Community Affairs Division of the Federal Reserve Bank of Chicago. “The magnitude of their financial setbacks also called for funds that were more in keeping with insurance payouts than with their hundreds of dollars in savings. The significantly lower rates of coverage and participants’ positive views about insurance suggest that there may be an unmet demand for insurance among this population.”
These findings were the result of a study conducted by the Federal Reserve Bank of Chicago, with input from the Urban Insurance Partners Institute (UIPI), a nonprofit insurance industry organization dedicated to helping insurers in urban markets.
The study results have been distributed to consumer and community asset building organizations, which can use the information to improve their consumer education and build insurance into their consumer asset-building programs.
The Federal Reserve Bank held four focus groups in Chicago to look at the relationship between insurance, wealth-building preservation, and financial access for low and moderate income consumers. Participants were asked how they deal with financial setbacks, how they protect their valuables, how they obtain information about insurance, and what insurance issues they would like to know more about.
Participants also wanted more information about insurance, according to Newberger, including clarification on the different types of insurance available and their costs, and how to compare products.
A copy of the study can be found at: www.chicagofed.org.
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