Charity group the Brotherhood of St Laurence wants insurers to be more flexible in the way they arrange premium payments to help tackle high levels of underinsurance among low-income Australians.

In a submission to the General Insurance Code of Practice review, the organisation says insurers should be required to have “no frills” insurance products and “appropriate” payment methods.

Gerard Brody, the Brotherhood’s Senior Manager, Financial Inclusion, says people can see the need for insurance but often can’t handle annual premiums payable in one hit or even month-by-month.

“We think appropriate products and payment methods are really key drivers to improving access to people on low incomes especially,” he told insuranceNEWS.com.au.

“Our experience is that people on low incomes actually budget fortnightly. If they are receiving payments through government assistance, that’s the way their budgets operate.”

The brotherhood wants “no frills” products to allow fortnightly payments and offer payment options such as Centrelink’s direct bill-paying service. It also wants insurers to provide an appropriate level of cover for people with limited household assets, give more options on paying excesses and even offer “disaster cover” which would only be payable in the event of substantial loss above a certain value.

“Often we see that some low-income people who have to pay an excess that is large will prevent them from making a claim, and the insurance essentially becomes worthless,” Mr Brody said.

“If there were options to pay an excess by instalments or over a period of time people could still claim on their insurance.”