Suncorp brand AAI has joined with non-profit organisation Good Shepherd Microfinance (GSM) to create affordable insurance for people on low incomes.

“Essentials by AAI” will target the 20% of adult Australians without contents, car or home cover.

The launch of the product follows a one-year collaboration between Suncorp and GSM.

“Suncorp has shown outstanding corporate leadership,” GSM CEO Adam Mooney told insuranceNEWS.com.au. “This is a world-leading product.”

Mr Mooney says “tangible expenses” such as groceries or rent and bills take precedence over buying insurance cover.

“Without insurance, it’s not possible to use everyday essentials, such as a car, with the peace of mind that comes with knowing you are protected if bad luck strikes,” Mr Mooney said.

“Insurance is important in enabling our clients to build assets and some wealth, however small, to act as a buffer against financial hardship and to build resilience.”

GSM estimates 3 million adult Australians are deemed “financially excluded”. Mr Mooney expects to sell 2000-5000 policies in the first year.

Essentials by AAI customers can “mix and match” cover for contents and cars, with premiums as low as $4 per week. 

Suncorp Personal Insurance CEO Mark Milliner, who has been a major driver behind the new product, says people without insurance are often those who need it most.

“Working with Good Shepherd Microfinance has helped us to better understand the needs of those doing it tough,” he said. “We’ve found that traditional insurance is often too expensive for them, and in many cases the level of cover is simply too high.

“Our research shows this market just wants cover for essentials such as their second-hand car and whitegoods.”

GSM and Suncorp have worked with external advisers – including financial counsellors, Legal Aid, the Financial Ombudsman Service, researchers and consumer representatives – to build a “relevant, affordable and simple insurance product”.

“It’s a great example of working with others in the community to create something that addresses the issues of financial exclusion in this country,” Mr Milliner said.

Key features of Essentials by AAI include cover options for contents worth $10,000 and $20,000, and up to two cars valued at $3000 and $5000.

Policyholders will also have two standard excess-free claims, with a $100 or $300 excess applying to subsequent claims.

Flexible payment options include fortnightly direct debits and payment via Centrelink’s bill service Centrepay. 

Essentials by AAI is available through Suncorp’s call centre or here.