The Scottish Government

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1. INTRODUCTION

The 2003 Scottish Executive Partnership Agreement ² included a commitment to " support home insurance schemes tied to rents paid to landlords in the social rented sector." In pursuing this commitment the Scottish Executive provided local authorities and the Scottish Federation of Housing Associations ( SFHA) with £400,000 in 2003/04 to promote take up of their home contents insurance schemes amongst local authority and housing association tenants. A further £100,000 was used for a national publicity campaign.

Most of Scotland's 32 local authorities operate and almost all housing associations promote a home contents insurance scheme for their tenants. The Scottish Executive funding was used to promote local authority insurance schemes through a variety of measures such as advertising and promotional leaflets and campaigns. SFHA's funding was used to promote the 'Diamond Insurance' scheme which is offered to the tenants of SFHA's member housing associations.

However, despite the nationally funded promotional work local authorities reported ³ only a relatively small increase in take up of their home contents insurance schemes. On average the level of take up increased by around 10% but this only took the proportion of local authority tenants who have home contents insurance provided through the local authority scheme to around 12%. The SFHA reported an increase in take-up of insurance through the Diamond Scheme of over 30%. However, this only took the take up of insurance through the scheme to around 9% of housing association tenants.

Therefore, by 2005 around 75,000 local authority and Housing Association tenants (c. 12% of tenants in the social rented sector) had a home contents insurance policy provided or promoted by their landlord.

The 2005 Scottish Household Survey ⁴ shows that despite the nationally funded promotional work the overall take-up of home contents insurance amongst tenants in the social rented sector actually fell from 56.1% in 2003 to 54.6% in 2005.

Promoting the take-up of home contents insurance remains one of the Scottish Executive's objectives and is part of the Financial Inclusion Action Plan that was published in January 2005:

• Support is being given for the provision of new household insurance products, including affordable home contents insurance underwritten by established insurance companies, by approved Credit Unions
• Social landlords (as part of their self-assessment part of the regulatory framework operated by Communities Scotland), are now required to consider what they are doing to improve access to and take-up of home contents insurance
• The possibility is being explored of using the networks of Registered Tenants Organisations to promote home contents insurance.

Aims and Objectives of this Study

The aim of this project is to explore the underlying reasons why the level of take-up of home contents insurance by social housing tenants is low, and to recommend measures that would raise it.

The objectives of the research are:

• to identify and develop an understanding of the reasons which underlie the choices made by tenants in the social rented sector about home contents insurance and the factors which influence these choices
• to explore some examples of approaches that have worked/ not worked in encouraging uptake of home contents insurance
• to identify best practice advice in take-up which can help to inform the work of credit unions and others in providing affordable home contents insurance.

Methodology

This study was informed by evidence from three sources:

• Desk based review of existing research and practice in Scotland and the rest of the UK
• Stakeholder interviews
• Tenants' focus groups.

Desk based research

A web based search and stakeholder interviews identified several research studies on home contents insurance in the social rented sector that have been carried out in recent years including:

• Insurance for all: a good practice guide ⁵
• Widening the safety net: Learning the lessons of insurance with-rent schemes ⁶
• Paying for peace of mind: Access to home contents insurance for low-income households ⁷
• Identification of barriers to tenants' take-up of low cost, high quality household contents insurance promoted by their landlord ⁸
• A Survey of Home Contents Insurance Schemes in the Social Rented Sector 2004-2005. ⁹

In addition we undertook a web based review of home contents insurance schemes operated by local authorities and housing association in the UK.

Stakeholder interviews

The second stage of the research involved 14 telephone interviews with representatives of a range of national and local stakeholders that have a direct involvement in the operation or promotion of home contents insurance in the social rented sector, including:

• Scottish Federation of Housing Associations ( SFHA)
• Insurance Brokers and an insurance underwriter
• Local authorities
• Housing associations
• Credit Unions
• A tenants' organisation.

Appendix 1 provides details of all the stakeholder interviewees.

The interviews were used to explore key issues such as

• differing experiences of take-up of home contents insurance
• what may have worked in encouraging take-up
• underlying reasons why take-up of home contents insurance may not have improved.

Tenants' Discussion and Focus Groups

The main element of primary research undertaken for this study was small discussion groups with social rented sector tenants in three areas and focus groups with Glasgow Housing Association ( GHA) tenants.

The three areas chosen for the discussion groups were: East Lothian, Glasgow (Shettleston) and West Dunbartonshire. One of these areas, East Lothian, has a relatively high level of home contents insurance amongst social rented tenants; whilst the other two areas have the lowest levels of take up of home contents insurance reported in the Scottish Household Survey.

In each area, invitations to attend the discussion groups were sent to around 400 local authority and housing association tenants - a randomly selected sample of equal number of tenants who have or have not taken out home contents insurance through their landlord. A total of 25 tenants, 10 of whom did not have home contents insurance participated in the small group discussions.

Table 1 provides a summary of the characteristics of the tenants who took part in the discussion groups in the three areas.

Table 1: Characteristics of Tenants who took part in Discussion Groups

Each small discussion group lasted around 40 minutes and involved an in-depth discussion about the choices tenants make in relation to home contents insurance.

In addition a series of focus groups conducted by Hexagon Research and Consulting as a follow up to a tenants satisfaction survey conducted on behalf of Glasgow Housing Association ( GHA) were used to gather the views and experiences of home contents insurance of tenants in 10 Local Housing Organisations ( LHOs). A total of 68 tenants participated in the focus groups; 24 tenants had a GHA home contents insurance policy; 19 had taken out private insurance; and, 25 had no home contents insurance. Table 2 provides the breakdown of tenants across the 10 LHOs.

Table 2: Characteristics of Tenants who took part in the LHO Focus Groups

Each focus group lasted for around one hour and included discussion around the following six themes:

• Satisfaction with home
• Satisfaction with LHO
• Property services
• Investment
• Contact and Communication
• Home contents insurance.

Three questions were asked specifically about home contents insurance:

1. Have you taken out home contents insurance? If so, is this through the GHA scheme or is it private?
2. Why do you not have insurance? Have you considered it and decided against it? Why?
3. What would help you decide to take out home contents insurance?

Since these focus groups were organised on a different basis and covered a wider range of issues than the small discussion groups they have been analysed and reported in separately.

Structure of this Report

This report begins with an overview and analysis of levels of take up of home contents insurance amongst social rented sector tenants followed by descriptions of the main types of schemes operated by local authority and housing association landlords - with rent and arms length schemes.

The main focus of the report is an analysis of the findings of the desk based research, stakeholder interviews and tenants' discussion and focus groups on the reasons underlying choices made by tenants with regards to whether to take out home contents insurance. This is based around three key questions:

• why do tenants not take out home contents insurance?
• why do tenants take out home contents insurance?
• what works to increase take up?

The report concludes with a series of recommendations for landlords and the Scottish Executive on how take-up of home contents insurance could be increased in the social rented sector.

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