According to a report published by the Association of British Insurers, 35% of people in the lowest-income households (less than GBP10,000 per year) in the UK have no insurance at all. But they also need insurance most as they face higher risks from crime, fire and flooding.

The research for the Association of British Insurers (ABI) found that 44% of people in the poorest households purchase home contents insurance, compared with nearly twice as many (82%) in those with average incomes (GBP15,000 to GBP30,000). Around one third had motor insurance and only one quarter had purchased life insurance.

When people with low incomes and no insurance have to replace stolen or damaged household goods, around a third of them borrow additional funds, increasing their indebtedness.

The ABI report also shows that poorer households face far greater risks than their more affluent neighbors. For instance: households with an income below GBP5,000 were 71% more likely to be burgled at least once compared with households with incomes of GBP30,000 or more; arson rates are up to 30 times higher in the most deprived communities; and people with the lowest incomes are also much more vulnerable to flooding.

Stephen Haddrill, director general of the ABI, said: Insurance provides valuable protection to people on all income levels. The poor are least able to deal with financial loss and depend most on insurance. We need to address the issue of low take-up in low-income groups. A lack of spare cash is the biggest factor holding back the purchase of insurance by lower income households.

The ABI will be addressing this issue through our financial inclusion action plan. In early 2008 we will launch a new campaign, with a special emphasis on insurance with rent schemes, improved financial education and easier access to insurance for customers with particular needs.