Consumer groups have urged the financial system inquiry to investigate insurance affordability and availability for low-income and disadvantaged groups, claiming the industry has made little effort to provide suitable products.

The Consumer Action Law Centre says affordability and the complexity of insurance prevent people on low incomes from obtaining adequate cover.

It says insurers should develop renters’ policies based on tenants’ needs – rather than “no-frills” home and contents cover – and should allow fortnightly premium payments through Centrepay.

Choice wants the inquiry to investigate insurance market failures, so people can obtain affordable cover.

It says premiums have increased significantly in recent years. “There are also issues around consumers’ access to information and documentation in a format they can readily understand, given that insurance is a complex product increasingly transacted through direct sales and renewals by telephone and the internet under a ‘no-advice’ model.”

Some groups call for implementation of a national agency, as recommended by the National Disaster Insurance Review, to manage mitigation and provide premium discounts.

Legal Aid NSW says people who need flood cover have opted out due to the cost.

It says insurers should be required to give customers key information that would affect rebuild costs, so people can make informed decisions about the level of cover to buy.

Legal Aid wants the Government to consider “product safety issues in insurance” that deal with products unsuitable for their needs.

Several groups raise concerns with funeral insurance. Legal Aid says premiums should be capped relative to the cost of a funeral.

The Consumer Action Law Centre says insurance policies should be covered by unfair contracts legislation.